Nasdaq Bids for Swedish Stock Exchange Cinnober

Newswires buzzed this week after the National Association of Securities Dealers Automated Quotations (Nasdaq) revealed its pending acquisition of Swedish crypto-friendly stock exchange software developer, Cinnober. The Nasdaq made “an USD 190m all cash recommended public offer” to the firm, which it describes as a significant “financial technology provider to brokers, exchanges and clearing houses worldwide.” 

“The combined intellectual capital, technology competence and capabilities of Cinnober and our Market Technology business will expand the breadth and depth of our fastest growing division at Nasdaq,” Nasdaq President and CEO Adena Friedman explained.

This week, a public announcement in Stockholm, Sweden revealed that Nasdaq had made a $190 million offer to gobble up Cinnober, claiming that it “would strengthen its position as one of the world’s leading market infrastructure technology providers.” 

“Not only have the global capital markets continued to evolve rapidly,” Ms. Friedman stated, “new marketplaces in various industries are demanding market technology infrastructure that enables rapid growth and scale as well as access to tools to promote market integrity. This acquisition will enhance our ability to serve market infrastructure operators worldwide, and will accelerate our ability to expand into new growth segments.”

The New York-based Nasdaq is the world’s second largest exchange by market cap, valued at around $10 trillion. It has been around for almost 50 years and is known as the first digital, automated stock market. Its emphasis on electronic production meant a lowering of the significant difference between the asking price of a stock and the bid. Such was thought to be a price discovery efficiency model.

“Since co-founding Cinnober in 1998, Cinnober has been on an exciting journey and has become a leading supplier of financial technology providing services to exchanges and trading houses worldwide,” co-founder and Chairman of the Board of Directors of Cinnober Nils-Robert Persson added.

As per the press release, Nasdaq “has offered to acquire all outstanding shares and warrants in Cinnober at a price of SEK 75 per share and SEK 85 per warrant. The transaction represents an offer value of approximately SEK 1,702m (appr. USD 190m). The Board of Directors of Cinnober has unanimously recommended that shareholders and warrant holders accept the offer. The acceptance period of the public tender offer is expected to close during the fourth quarter of 2018, subject to certain conditions customary in Swedish public tender offers (e.g. that Nasdaq becomes owner of more than 90% of the shares in Cinnober and review by relevant competition authorities).”

“I see the offer as the next step in Cinnober’s development,” Mr. Persson explained, “as it will enable Cinnober and its highly talented employees to be even more successful in serving customers as well as expanding its technology and offering to even more customers and segments. I really believe in the strategic logic of combining Cinnober and Nasdaq’s Market Technology business also as it reinforces the strong technology foundation in Sweden. As the largest shareholder of Cinnober, I am supportive of the offer and intend to accept the offer.”

Custodial services have long been believed to be a major concern for legacy banks regarding crypto since hacks and their headlines have spooked huge money. Cinnober has also teamed up with BitGo.