Nasdaq Makes $190 Million Bid for Cinnober

Nasdaq is set to acquire Cinnober Financial Technologies, a rival provider of post-trade and surveillance systems, in an all-cash offer that values the vendor at $190 million.

The Swedish vendor provides exchange technologies to groups such as the New York Stock Exchange, the Johannesburg Stock Exchange, and others, as does Nasdaq’s Market Technology arm, which serves as its vendor business.

“[Cinnober] has a high degree of supporting capabilities,” says Lars Ottersgård, head of Market Technology at Nasdaq. “One is, of course, if you look at traditional market structure, they have a very good understanding of that type of technology. We know that their technical team has a very serious skill set. It’s a very quick way of leveraging resources to speed up our growth in that space. It’s highly complementary. We also see that they have areas they’re moving into in the bank and broker space that are complementary to our assets.”

In addition, he adds, Cinnober’s existing presences in Stockholm and London dovetail nicely with Nasdaq’s own, as do their corporate cultures.

Despite an impressive client roster, however, Cinnober has experienced a period of fairly severe instability this year. Disappointing financial results in the second quarter prompted Veronica Augustsson, then-CEO of the company, to announce cutbacks, and the company lost senior figures including Jamie Khursid, the CEO of its regulatory reporting service.

Then, in mid-August, Augustsson left the company, being replaced by Peter Lenardos, a former banks analyst at RBC Capital Markets. They then named Fredrik Nihlen, previously vice president of finance, as the new group CFO. Taken as a whole, the company has given the impression of being in a period of, if not crisis, then close to it.

Inheriting such a situation can be a challenge, however, Ottersgård is guarded in his answers on what Nasdaq might do to rectify the situation.

“I can’t say much before we close the deal. But clearly, we feel comfortable about how we’re going to integrate these companies into a well-functioning machine,” he says.

The period for Cinnober shareholders to accept Nasdaq’s offer—which has been recommended by its board of directors—runs from late October to mid-December. The deal will also be subject to customary regulatory approvals—as well as potential challenges from rivals and hostile takeover bids—in the interim.