Nasdaq to acquire Adenza from Thoma Bravo for $10.5B in cash and stock
Nasdaq (NDAQ) announced it has entered into a definitive agreement to acquire Adenza, a provider of mission-critical risk management and regulatory software to the financial services industry, from Thoma Bravo for $10.5B in cash and shares of common stock.
The acquisition accelerates Nasdaq’s strategic vision to become the trusted fabric of the world’s financial system.
Upon the closing of the transaction, Holden Spaht, a Managing Partner at Thoma Bravo, is expected to be appointed to Nasdaq’s Board of Directors, which will be expanded to twelve members.
Adenza brings an attractive financial profile, with approximately $590M of 2023E revenue, organic revenue growth of approximately 15%, annual recurring revenue growth of 18%, and an adjusted EBITDA margin of 58%.
The company has a loyal and growing client base, with 98% gross retention, 115% net retention, and a durable mix of approximately 80% recurring revenue.
The addition of Adenza is projected to enhance Nasdaq’s already strong financial profile by growing Solutions Businesses revenue from 71% of total revenue today to 77% in 2023E, increasing adjusted EBITDA margin to 57%, and adding approximately $300M of annual unlevered pre-tax cash flow.
Nasdaq is acquiring Adenza for $10.5B, comprised of $5.75B in cash and 85.6M shares of Nasdaq common stock, based on the volume-weighted average price per share over 15 consecutive trading days prior to signing.
Nasdaq has obtained fully committed bridge financing for the cash portion of the consideration and plans to issue approximately $5.9B of debt between signing and closing and use the proceeds to replace the bridge commitment.
At the closing of the transaction, Nasdaq will issue the shares to the owners of Adenza, which is a company controlled by Thoma Bravo, representing approximately 14.9% of the outstanding shares of Nasdaq.
The transaction is subject to regulatory approvals and other customary closing conditions and is expected to close within six to nine months.
NDAQ is down 11% to $51.30.
Following the Adenza transaction, Nasdaq expects leverage of approximately 4.7x and investment grade ratings of BBB/Baa2 Stable.
Nasdaq is committed to reducing leverage to 4.0x in 18 months and to approximately 3.3x in 36 months. Nasdaq intends to pursue its existing capital deployment plan, including steadily increasing its dividend per share and dividend payout ratio to achieve 35%-38% within three to four years.
The company intends to repurchase shares over time to partially offset dilution from the transaction in addition to continuing to offset employee share-based compensation.
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