Nasdaq shares drop 2.8% following announcement of stake sale by Thoma Bravo

Nasdaq said on Friday that private equity company Thoma Bravo will sell 41.6 million shares in the transatlantic exchange operator via a secondary public offering.

Nasdaq shares experienced a 2.8% decline in after-hours trading following the announcement of Thoma Bravo’s plan to reduce its stake in the exchange operator.

This move is part of a broader transaction that includes a share offering and a repurchase agreement.

Thoma Bravo’s Stake Reduction

Stake Sale Details

Thoma Bravo, which currently holds a nearly 14.9% stake in Nasdaq, is set to decrease its shareholding to 7.4%, or 42.8 million shares, through the offering.

Based on Nasdaq’s last closing price, this sale will generate approximately $2.79 billion for the private equity firm. After this transaction, Thoma Bravo will become the fifth-largest shareholder in Nasdaq.

Contractual Lock-Up

The remaining shares held by Thoma Bravo will be subject to an existing contractual lock-up until May 1, 2025. This provision ensures that Thoma Bravo cannot sell any more shares until the lock-up period expires.

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Impact and Market Reaction

Market Perspective

According to Michael Cyprys, an analyst at Morgan Stanley, the release of Thoma Bravo-held Nasdaq shares into the market could serve as a positive catalyst, alleviating the overhang on the shares.

This sentiment reflects a belief that the increased liquidity and reduced uncertainty about future share sales could benefit Nasdaq’s stock performance.

Share Repurchase Agreement

Repurchase Details

In conjunction with Thoma Bravo’s stake sale, Nasdaq has entered into a share repurchase agreement with the private equity firm. Nasdaq plans to buy back 1.2 million shares, provided that the total repurchased amount does not exceed $120 million.

This buyback will be funded using Nasdaq’s existing cash reserves and borrowings under its commercial paper program.

Changes in Shareholder Composition

Top Shareholders

Earlier this year, Borse Dubai reduced its stake in Nasdaq, allowing Thoma Bravo to become the company’s top shareholder. However, following the completion of Thoma Bravo’s share offering, Borse Dubai is expected to regain its position as Nasdaq’s largest shareholder.

Goldman Sachs’ Role

Sole Book-Running Manager

Goldman Sachs has been appointed as the sole book-running manager for the offering, overseeing the sale process and ensuring its successful execution.

This series of transactions highlights significant shifts in Nasdaq’s shareholder structure and market dynamics, potentially impacting its stock performance and investor relations in the coming months.