Dubai Financial Markets (DFM) is to buy Nasdaq Dubai for $121 million in an effort to cut costs and restructure its business in the wake of the region's ongoing debt crisis.
Under the agreement, Nasdaq Dubai will continue to operate as a distinct entity alongside DFM's Borse Dubai. The two exchanges - both of which operate on Nasdaq OMX trading platforms - say they will integrate their exchange technology "to benefit from cost synergies and to provide enhanced functionality and participant access".
Adena Friedman, chief financial officer, Nasdaq OMX, comments: "The combination of the two Dubai exchanges has long been seen as a preferred way forward. It will create greater efficiencies from a systems perspective, enabling retail investors to better access Nasdaq Dubai and providing issuers with a choice of commercial and regulatory structures," said .
DFM said the offer comprises $102 million in cash and 40 Million DFM shares.
Nasdaq OMX holds a one-third stake in Nasdaq Dubai, acquired in February 2008 as part of an agreement with Borse Dubai, after both were locked in a battle for Nordic exchange operator OMX.
However, the venture has failed to take off and fewer than 20 companies are currently listed on the exchange.
The US exchange says that upon completion, the transaction may result in a gain or a loss "based on the then-current market price of DFM shares and the then-current carrying value of Nasdaq OMX's Nasdaq Dubai investment".