(January 25 – 17:30 ET) – The second phase of the Nasdaq private placement has formally closed and the exchange is now looking toward going public.

Nasdaq and the National Association of Securities Inc. raised over $180 million in the second phase of the private placement, making this transaction the fourth largest U.S. equity offering in December 2000. (All figures in U.S. dollars.)

This completes the planned reorganization and recapitalization of Nasdaq, which was initiated by an April 2000 vote. Combined, Phase I and Phase II raised $516 million — $326 million for Nasdaq and $190 million for the NASD. If all of the warrants sold in both phases are fully exercised, the NASD will receive an additional $627 million over the next five years, and approximately 60% of Nasdaq will be in the hands of over 2,900 investors.

The investors in the Nasdaq include all of Nasdaq’s largest Market Makers, its largest issuers, over 50% of the NASD membership, and several large institutional buy-side firms. No current investor holds more than a 5% stake.

Commenting on today’s announcement, Frank Zarb, NASD chairman and Nasdaq chairman and CEO, said, “The closing of the second phase marks a key milestone in the NASD restructuring. The closing of the private placement is an important step, but only a step in the process of separating Nasdaq from the NASD and creating a truly independent investor-owned Nasdaq. There are two key events on the horizon that will make that happen: first, Nasdaq achieving exchange registration and second, the NASD further reducing its ownership position. We have come a long way towards becoming an independent shareholder-owned market, but we are not quite there yet.”

Robert Glauber, NASD’s CEO and president said, “With the completion of this extended and careful restructuring process, the NASD will be able to focus solely on its historical role of industry self-regulation, financially strengthened and properly independent. We will now be better positioned to deliver the tough and fair regulation on which investors rely, with the efficiency the firms and markets we oversee have a right to expect.”

Glauber said that once exchange registration is granted the NASD has committed to vote those Nasdaq shares over which it has control in a manner proportional to the votes cast by the other Nasdaq shareholders. Glauber also said the NASD intends to sell off its remaining minority Nasdaq position expeditiously in an orderly fashion and subject to market conditions.

Zarb suggested that Nasdaq would now contemplate an IPO, “With the private placement behind us and the process of our formally registering as an exchange underway, I expect that the Nasdaq board will consider a wide range equity enhancing options, including accessing the public capital markets via an initial public offering.”

Nasdaq’s board also approved the nomination of four new additional directors: Stanley O’Neal, president of Merrill Lynch’s U.S. Private Client Group, Vikram Pandit, co-president of Morgan Stanley Dean Witter Institutional Services, Sir Martins Sorrell, group chief executive of WPP Group plc. and Michael Casey, EVP, CFO, and chief administrative officer of Starbucks Coffee Company.
-IE Staff