US stock market Nasdaq is in exclusive negotiations to buy Reuters' majority-owned electronic broking and trading subsidiary Instinet, according to the Financial Times.
Citing "people familiar with the company" the FT says Reuters, which owns 63% of Instinet, is expected to disclose further information on the deal when the vendor releases its first quarter results next week.
Reuters said in November last year that it was looking at a possible sale of the Instinet unit as part of plans to shed non-core assets under its cost cutting programme. The FT says Reuters intends to sell its entire stake rather than keep a small holding.
In January US-based Archipelago Holdings, which operates the ArcaEx electronic stock market, was considered the favourite to buy Instinet, in a deal rumoured to be worth as much as $3bn. But according to the latest FT report, Reuters is now in exclusive talks with another buyer.
In February Nasdaq chief Bob Greifeld told reporters that the exchange was interesting in acquiring another electronic communications network (ECN) "if certain opportunities present themselves". Greifeld made the comments after the exchange reported a return to profitability in the fourth quarter 2004 following a year of cost reductions and lay-offs. The exchange has been focussing on increasing market share in the US after pulling the plug on loss-making operations in Europe and Japan.
If the deal is successful Instinet would be Nasdaq's second large acquisition in less than a year - the exchange bought the Brut ECN from SunGard in July 2004 - and could see it become a bigger threat to the New York Stock Exchange.