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Stock options have been a hot property. Since 2003, the market has grown 30% per year. Then again, options are a great way to manage volatility, or juice up a portfolio.
Well, NASDAQ wants a piece of the action. As a result, the firm has agreed to shell out $652 million for the Philadelphia Stock Exchange (PHLX).
True, the PHLX seems like a throwback. Hey, it was founded in 1790 and is actually older then the NYSE (NYSE: NYX).
But, over the years, the PHLX has made some key changes. In fact, it is now the number three player in the options market (in the U.S.). It helped that the firm attracted investments from Citigroup (NASDAQ: C), Credit Suisse Group (NYSE: CS), Merrill Lynch (NYSE: MER), Morgan Stanley (NYSE: MS) and UBS (NYSE: UBS), and Citadel.
All in all, the PHLX deal seems like a pretty good move for the Naz. It should help to diversify things as well as boost growth (the deal is expected to be accretive in 2009).
NASDAQ does have a lot on its plate right now. For example, earlier this year the firm purchased the Boston Stock Exchange and is linking up with Sweden's OMX AB. So I suspect it will be busy with integration for the next couple quarters.
And visit DealProfiles.com to check out other recent M&A deals.
Tom Taulli is the author of various books, including The Complete M&A Handbook
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