Form S-4
Table of Contents

As filed with the Securities and Exchange Commission on August 7, 2007

Registration No. 333-            


UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


FORM S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 


THE NASDAQ STOCK MARKET, INC.

(Exact name of registrant as specified in its charter)

 


 

Delaware   6200   52-1165937

(State or other jurisdiction of

incorporation or organization)

 

(Primary Standard Industrial

Classification Code Number)

 

(I.R.S. Employer

Identification Number)

One Liberty Plaza New York, New York 10006 (212) 401-8700

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

 


Edward S. Knight, Esq. Executive Vice President and General Counsel One Liberty Plaza New York, New York 10006 (212) 401-8700

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 


Copies to:

 

Eric J. Friedman, Esq.

Skadden, Arps, Slate, Meagher & Flom LLP

Four Times Square

New York, New York 10036

(212) 735-3000

 

Magnus Billing, Esq.

General Counsel

OMX AB

Tullvaktsvägen 15

105 78 Stockholm, Sweden

(46) 8-405-60-00

 

William F. Gorin, Esq.

Christopher E. Austin, Esq.

Cleary Gottlieb Steen & Hamilton LLP

One Liberty Plaza

New York, New York 10006

(212) 225-2000

 


Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after this registration statement becomes effective and upon consummation of the transactions described in the enclosed proxy statement/prospectus.

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.  ¨

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

 

 

Title of each class of

securities to be registered

 

Amount to be

registered

 

Proposed

Maximum

Offering

Price

per share

 

Proposed

Maximum

aggregate offering

price

 

Amount of

Registration fee

Common Stock, par value $0.01 per share

  60,561,515(1)   N/A   $2,008,500,736.26(2)   $61,660.97
 
 
(1) Represents the maximum number of shares of The Nasdaq Stock Market, Inc. common stock issuable if all shares of OMX AB are tendered based on an exchange ratio equivalent to 0.502 shares of Nasdaq common stock for each share of OMX.

 

(2) Pursuant to Rule 457(c) and Rule 457(f) under the Securities Act, and solely for the purpose of calculating the registration fee, the market value of the securities to be received was calculated as the product of (i) 120,640,467 shares of OMX AB (publ), a public corporation organized under the laws of Sweden and (ii) the average of the high and low sale prices of OMX shares as reported on the Nordic Exchange on July 31, 2007 (SEK 204.5) (equivalent to $30.46 based on the July 31, 2007 applicable exchange rate of SEK 6.7147/$), minus $1,665,673,166, the estimated maximum aggregate amount of cash to be paid by Nasdaq in the offer.

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

 



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The information in this proxy statement/prospectus is not complete and may be changed. We may not sell the securities offered by this proxy statement/prospectus until the registration statement filed with the Securities and Exchange Commission is effective. This proxy statement/prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities in any jurisdiction where an offer, solicitation or sale is not permitted.

 

PRELIMINARY—SUBJECT TO COMPLETION—DATED AUGUST [·], 2007

LOGO

PROXY STATEMENT/PROSPECTUS

Dear Holders of Nasdaq Voting Securities and U.S. OMX Shareholders:

On behalf of the Board of Directors of The Nasdaq Stock Market, Inc., we are pleased to deliver this Proxy Statement/Prospectus relating to the proposed combination of OMX AB (publ), a public corporation organized under the laws of Sweden, with Nasdaq. The consideration offered by Nasdaq is equivalent to 0.502 shares of Nasdaq Common Stock and SEK 94.3 in cash for each OMX share that is validly tendered and not properly withdrawn. Nasdaq is also offering OMX shareholders who accept the Offer prior to the Offer being declared unconditional a mix and match facility, which will enable OMX shareholders to elect to exchange a higher proportion of their OMX Shares in return for cash or to exchange a higher proportion of their OMX Shares in exchange for Nasdaq Common Stock, subject to matching elections by other OMX shareholders.

The combination of Nasdaq and OMX:

 

   

will create the world’s premier exchange company;

 

   

will bring together two companies with a common culture and vision of innovation, competitiveness and pioneering technological expertise, uniting Nasdaq’s leading global brand, highly efficient electronic trading platform and track record of customer focused innovation with OMX’s global technology services platform and customer base, efficient Nordic Exchange, multi-asset class capabilities and track record of successful cross-border exchange integrations;

 

   

is expected to create significant value for the combined company’s shareholders through the realization of pre-tax annual cost and revenue synergies of approximately $150 million (SEK 1,025 million) from 2010; and

 

   

is expected to be accretive to earnings per share in 2009.

The combination of Nasdaq and OMX also provides a unique opportunity for the Nordic markets by placing them at the heart of the rapid consolidation of the exchange sector and becoming a key component of a world-leading company in the exchange industry. The OMX regulatory model will be unaffected by the combination and the combined company will be well-positioned as an attractive partner with the capacity to compete effectively with other exchanges and to continue consolidation across Europe and globally. We currently estimate that approximately 28% of the shares of Nasdaq Common Stock outstanding after completion of the Offer will be held by current OMX shareholders and that approximately 72% of the shares of Nasdaq Common Stock outstanding after completion of the Offer will be held by current Nasdaq shareholders. The receipt of cash and shares of Nasdaq Common Stock in exchange for OMX shares pursuant to the Offer will be a taxable transaction to OMX shareholders who are U.S. holders for U.S. federal income tax purposes.

The combination of Nasdaq and OMX is being effected through an offer for all of the outstanding shares of OMX, which we refer to as the Offer. Completion of the Offer requires the approval by holders of Nasdaq voting securities of the issuance of up to 60,561,515 shares of Nasdaq Common Stock to complete the Offer. We also are seeking the approval of holders of Nasdaq voting securities for an amendment to our Restated Certificate of Incorporation to change our name to “The NASDAQ OMX Group, Inc.” upon completion of the Offer. Nasdaq’s Board of Directors has scheduled a Special Meeting of holders of Nasdaq voting securities to obtain these approvals on [·], 2007. Approval of the issuance of Nasdaq Common Stock requires the affirmative vote of at least a majority of the votes present in person or represented by proxy at the Special Meeting and entitled to vote thereon, provided that a quorum consisting of the holders of at least a majority (greater than 50%) of the votes entitled to be cast by holders of Nasdaq voting securities is present in person or by proxy. Approval of the amendment to our Restated Certificate of Incorporation requires the affirmative vote of at least a majority of our outstanding voting power.

Our obligation to complete the Offer is also subject to the other conditions listed under “Conditions to the Offer.” This Proxy Statement/Prospectus also provides information about us, about OMX and about our proposed combination with OMX that holders of Nasdaq voting securities should know when they vote and that OMX shareholders in the United States and OMX shareholders that are U.S. persons should know when they decide whether or not to tender their shares in the Offer. The section entitled “ Risk Factors” beginning on page 21 contains a description of some of the risks that you should consider in evaluating our proposed combination with OMX. We urge you to read this entire Proxy Statement/Prospectus carefully.


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Nasdaq’s Board of Directors has unanimously approved the Offer and the issuance of Nasdaq Common Stock pursuant to the Offer. Accordingly, Nasdaq’s Board of Directors unanimously recommends that holders of Nasdaq voting securities vote “for” approval of the issuance of up to 60,561,515 shares of Nasdaq Common Stock pursuant to the Offer and “for” approval of the amendment to Nasdaq’s Restated Certificate of Incorporation to change Nasdaq’s name to “The NASDAQ OMX Group, Inc.”

OMX’s Board of Directors has announced that it has unanimously recommended that shareholders of OMX accept the Offer.

If you are a holder of Nasdaq voting securities, whether or not you plan to attend the Special Meeting, your vote is very important. Please sign and submit your proxy as soon as possible so that your securities can be voted at the Special Meeting in accordance with your instructions. Record holders of Nasdaq voting securities can vote via the Internet, by telephone, or by mailing the enclosed proxy card (beneficial owners may vote over the Internet, by telephone, or by mailing the enclosed voting instructions). Instructions for using these convenient services appear on the instructions on the enclosed proxy card or voting instructions. On behalf of Nasdaq, we look forward to seeing holders of Nasdaq Voting Securities at the Special Meeting and we thank you for your support.

Sincerely,

LOGO

Robert Greifeld

Chief Executive Officer and President

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this Proxy Statement/Prospectus. Any representation to the contrary is a criminal offense.

The Offer is governed by and construed in accordance with the laws of Sweden. The Swedish Act Concerning Public Takeover Bids in the Stock Market (Sw: lagen (2006:451) om offentliga uppköpserbjudanden på aktiemarknaden) applies in relation to the Offer. Furthermore, the OMX Nordic Exchange Stockholm AB Rules Concerning Public Takeover Bids in the Stock Market (Sw: OMX Nordic Exchange Stockholm AB’s regler rörande offentliga uppköpserbjudanden på aktiemarknaden) and the Swedish Securities Council’s (Sw: Aktiemarknadsnämnden) rulings regarding interpretation and application of the OMX Nordic Exchange Stockholm Rules Concerning Public Takeover Bids in the Stock Market (including its rulings with respect to the Rules on Public Offers for the Acquisition of Shares issued by the Swedish Industry and Commerce Stock Exchange Committee) apply in relation to the Offer. Furthermore, in accordance with the Swedish Act Concerning Public Takeover Bids in the Stock Market, Nasdaq has contractually agreed with the OMX Nordic Exchange Stockholm AB to comply with the Takeover Rules and to submit to any sanctions imposed by the OMX Nordic Exchange Stockholm AB upon breach of the OMX Nordic Exchange Stockholm Rules Concerning Public Takeover Bids in the Stock Market. The courts of Sweden have exclusive jurisdiction over any dispute arising out of or in connection with the Offer and the City Court of Stockholm will be the court of first instance, although this may not preclude claims under the U.S. securities laws regarding the disclosures made herein from being brought in U.S. courts.

 

The date of this Proxy Statement/Prospectus is [ ·], 2007, and it is first being mailed or otherwise delivered to
holders of Nasdaq Voting Securities and to those OMX shareholders that are in the United States or that are U.S.
persons on or about [
·], 2007.

 

In addition to this Proxy Statement/Prospectus, an offer document and prospectus has been filed for registration
with the Swedish Financial Supervisory Authority in accordance with Chapter 2a of the Swedish Financial
Instruments Trading Act (1991:980). The Swedish Securities Council has extended the time period for filing this
offer document and prospectus with the Swedish Financial Supervisory Authority from four weeks to ten weeks from
announcement of the Offer (see ruling AMN 2007:19) and, subsequently, by a further extension of 20 weeks from
announcement of the Offer (see ruling AMN 2007: 26). That offer document and prospectus will only be delivered to
OMX shareholders who are non-U.S. persons and who are not located in the United States, Australia, Canada, Japan
or the Republic of South Africa, among other jurisdictions.


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The Nasdaq Stock Market, Inc.

One Liberty Plaza

New York, New York 10006

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD ON [·], 2007

To the holders of Voting Securities of The Nasdaq Stock Market, Inc.:

A Special Meeting of the holders of Voting Securities of The Nasdaq Stock Market, Inc., will be held at [ ·], on [·], 2007 at [·], local time, for the following matters:

 

  1. To approve the issuance of up to 60,561,515 shares of Nasdaq’s common stock, par value $0.01 per share, pursuant to our proposed combination with OMX AB (publ), a public corporation organized under the laws of Sweden, such combination to be effected through an offer for all the outstanding shares of OMX.

 

  2. To approve an amendment to Nasdaq’s Restated Certificate of Incorporation to change Nasdaq’s name to “The NASDAQ OMX Group, Inc.” upon completion of our offer for all the outstanding shares of OMX.

 

  3. To transact such other business as may properly come before the meeting or any adjournment or postponement thereof.

Only holders of Nasdaq Voting Securities at the close of business on [·], 2007, which we refer to as the Record Date, are entitled to notice of and to vote at the Special Meeting. A list of such holders as of the Record Date will be available during normal business hours for examination by any such holder for a period of ten days prior to [·], 2007, at the principal executive offices of The Nasdaq Stock Market, Inc., One Liberty Plaza, New York, New York 10006.

All holders of Nasdaq Voting Securities are urged to attend the meeting in person or by proxy. Your vote is important. Whether or not you expect to attend the meeting in person, please sign and submit your proxy as soon as possible so that your securities can be voted at the Special Meeting in accordance with the instructions on the enclosed proxy card (beneficial owners may vote over the Internet, by telephone, or by mailing the enclosed voting instructions). The proxy is revocable and will not affect your right to vote in person in the event you attend the Special Meeting. You may revoke your proxy at any time before it is voted. If you receive more than one proxy card because your securities are registered in different names or at different addresses, please sign and return each proxy card so that all of your securities will be represented at the Special Meeting.

 

By Order of the Board of Directors,

LOGO

Robert Greifeld

Chief Executive Officer and President

New York, New York

[·], 2007


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IMPORTANT

Nasdaq files annual, quarterly and special reports, proxy statements and other information with the S.E.C. under the Securities Exchange Act of 1934, as amended, which we refer to as the Exchange Act. You may read and copy these reports and other information filed by Nasdaq at the Public Reference Room, 100 F Street, N.E., Washington, D.C. 20549, at prescribed rates. You may obtain information on the operation of the Public Reference Room by calling the S.E.C. at 1-800-SEC-0330.

The S.E.C. also maintains an Internet worldwide web site that contains reports, proxy statements and other information about issuers, like Nasdaq, who file electronically with the S.E.C. through the Electronic Data Gathering, Analysis and Retrieval (EDGAR) system. The address of this site is http://www.sec.gov.

This Proxy Statement/Prospectus incorporates by reference important business and financial information about Nasdaq that is not included in or delivered with this Proxy Statement/Prospectus. You may request this information, which includes copies of Nasdaq’s annual, quarterly and special reports, proxy statements and other information, from Nasdaq, without charge, excluding all exhibits, unless we have specifically incorporated by reference an exhibit in this Proxy Statement/Prospectus. Holders of Nasdaq Voting Securities and U.S. OMX shareholders may obtain documents incorporated by reference in this Proxy Statement/Prospectus by requesting them from Nasdaq in writing or by telephone at the following address or telephone number:

The Nasdaq Stock Market, Inc.

One Liberty Plaza

New York, NY 10006

Phone: (212) 401-8742

To obtain timely delivery, holders of Nasdaq Voting Securities must request any information no later than five business days before [·], 2007 and OMX’s U.S. shareholders must request any information no later than five business days before [·], 2007.

In addition, Nasdaq provides copies of its Forms 8-K, 10-K, 10-Q, Proxy Statement and Annual Report at no charge to investors upon request and makes electronic copies of its most recently filed reports available through its website at http://ir.nasdaq.com/sec.cfm as soon as reasonably practicable after filing such material with the S.E.C.

For a more detailed description of the information incorporated by reference into this Proxy Statement/Prospectus and how you may obtain it, see “Where You Can Find More Information” on page 210 and “Incorporation by Reference” on page 210.

Holders of Nasdaq Voting Securities who have questions about the Special Meeting or how to vote or revote their proxy, or who need additional copies of this Proxy Statement/Prospectus, should contact Mellon Investor Services LLC toll-free at 1-866-374-7270.

U.S. OMX shareholders who have questions about the Offer should contact:

[·]

If you would like to request additional copies of the Proxy Statement/Prospectus from Nasdaq, please do so before [·], 2007 in order to receive them before the Special Meeting.


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TABLE OF CONTENTS

 

     Page

QUESTIONS AND ANSWERS

  

vi

SUMMARY OF THE OFFER

   1

The Nasdaq Stock Market, Inc.

   1

OMX AB (publ)

   1

The Offer

   2

Why You are Receiving this Proxy Statement/Prospectus

   3

Nasdaq’s and OMX’s Reasons for the Offer

   3

What OMX Shareholders will Receive in the Offer

   3

Mix and Match Facility

   3

Principal Agreements

   3

Approval by Holders of Nasdaq Voting Securities

   4

Opinions of Financial Advisors

   4

Risk Factors

   5

Conditions to the Offer

   5

Termination of the Transaction Agreement

   5

Payment of Termination Fee

   5

No Solicitation of Transactions

   5

Interests of Certain Persons in the Offer

   6

Material U.S. Federal Income Tax Consequences

   6

Anticipated Accounting Treatment

   6

Regulatory Matters

   6

Directors and Management of the Combined Company Following the Completion of the Offer

   6

Appraisal Rights

   6

Compulsory Acquisition Proceedings

   7

Comparison of Shareholder Rights

   7

SUMMARY SELECTED CONSOLIDATED FINANCIAL INFORMATION OF NASDAQ

   8

SUMMARY SELECTED CONSOLIDATED FINANCIAL INFORMATION OF OMX

   10

EXCHANGE RATE INFORMATION

  

15

SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA OF THE COMBINED COMPANY

  

16

COMPARATIVE HISTORICAL AND PRO FORMA PER SHARE DATA

  

17

Nasdaq Historical

  

17

OMX Historical

  

17

Combined Company Pro Forma

  

17

MARKET PRICE AND DIVIDEND INFORMATION

  

18

Dividend Policy

  

19

FORWARD-LOOKING STATEMENTS

  

20

RISK FACTORS

  

21

Risks Related to the Offer

  

21

Risks Relating to the Combined Company’s Business

  

26

Risks Relating to an Investment in Nasdaq Common Stock

  

39

THE SPECIAL MEETING OF HOLDERS OF NASDAQ VOTING SECURITIES

  

42

Time, Place and Purpose of the Nasdaq Special Meeting

  

42

Who Can Vote at the Nasdaq Special Meeting

  

42

Quorum

  

42

Required Vote

  

43

Adjournments

  

43

Manner of Voting

  

43

 

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     Page

Broker Non-Votes

  

44

Solicitation of Proxies

  

44

PROPOSALS TO BE CONSIDERED AND VOTED UPON BY HOLDERS OF NASDAQ VOTING SECURITIES AT THE SPECIAL MEETING

  

45

Proposal One

  

45

Proposal Two

  

46

THE OFFER

  

47

Background of the Offer

  

47

Nasdaq’s and OMX’s Reasons for the Offer

  

49

Recommendation of Nasdaq’s Board of Directors

  

52

Recommendation of OMX’s Board of Directors

  

53

Opinion of J.P. Morgan Securities Inc.—Financial Advisor to Nasdaq

  

55

Opinions of Morgan Stanley & Co. Limited and Credit Suisse Securities (Europe) Limited—Financial Advisors to OMX

  

63

Interests of Certain Persons in the Offer

  

70

Material U.S. Federal Income Tax Considerations

  

71

Material Swedish Tax Considerations

  

75

Certain Tax Issues for Shareholders Resident Outside of Sweden

  

79

Anticipated Accounting Treatment of the Offer

  

79

Appraisal Rights

  

79

Restrictions on Sales of Nasdaq Common Stock Received by OMX Affiliates

  

79

Financing of the Offer

  

80

Regulatory Matters

  

81

Principal Agreements

  

82

Directors and Management of the Combined Company Following the Completion of the Offer

  

86

TERMS OF THE OFFER

  

87

Cost of Transfer

  

87

Conditions to the Offer

  

88

Mix and Match Facility

  

89

Participation in the Offer Through This Proxy Statement/Prospectus

  

91

Acceptance Period

  

92

Right to Extend the Acceptance Period

  

92

Acceptance Procedure

  

92

Right to Withdrawal of Acceptance

  

95

Transfer Restrictions

  

96

Settlement

  

96

Fractional Shares

  

98

Rights Pertaining to the Shares of Nasdaq Common Stock

  

99

Directly Registered Shares in Nasdaq

  

99

Application to List the Nasdaq Shares on the OMX Nordic Exchange Stockholm AB

  

99

Trading in Nasdaq Common Stock on the Nasdaq Global Select Market

  

99

Dividends

  

99

Meetings of Shareholders

  

100

Stock Market Reporting

  

100

Governing Law

  

100

Share Ownership Information

  

100

Special Considerations

  

101

DESCRIPTION OF NASDAQ CAPITAL STOCK

  

102

Nasdaq Common Stock

  

102

Preferred Stock

  

102

 

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     Page

Certain Provisions of the Restated Certificate of Incorporation and By-Laws

  

102

Authorized But Unissued Shares

  

103

Delaware Business Combination Statute

  

103

INFORMATION ABOUT OMX

  

105

Introduction

  

105

Competition

  

105

Customers

  

106

History

  

106

The OMX Timeline

  

107

Business Model and Strategy

  

107

Customer Offerings

  

109

Three Business Areas

  

110

Nordic Marketplaces

  

110

Information Services & New Markets

  

113

Market Technology

  

117

Research and Development

  

120

Intellectual Property

  

120

Real Estate

  

121

Insurance

  

121

Legal Proceedings

  

122

Management

  

122

Compensation Discussion and Analysis

  

128

Summary Compensation Table

  

131

Outstanding Equity Awards at Fiscal Year-End

  

133

Retirement Plans

  

134

Potential Payments on Termination of Employment or Change in Control

  

134

Director Compensation

   139

Compensation Committee Interlocks and Insider Participation

  

140

Certain Relationships and Related Party Transactions

  

140

Beneficial Ownership of Management

  

140

Major Shareholders and Affiliates

  

141

SELECTED HISTORICAL FINANCIAL DATA OF OMX

  

142

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF OMX

  

147

Overview

  

147

Sources of Revenue and Principal Expense Items

  

147

Results of Operations for Six Months Ended June 30, 2007 Compared to Six Months Ended June 30, 2006

  

150

Results of Operations for the Year Ended December 31, 2006 Compared to the Year Ended December 31, 2005

  

154

Results of Operations for the Year Ended December 31, 2005 Compared to the Year Ended December 31, 2004

  

158

Liquidity and Capital Resources

  

161

Debt and Minority Put Options

  

162

Contractual Obligations

  

163

Off Balance Sheet Arrangements

  

163

Critical Accounting Policies

  

163

Quantitative and Qualitative Disclosures About Market Risk

  

164

Currency Exposure

  

167

Summary of Material Differences between IFRS and U.S. GAAP

  

169

 

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     Page

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA OF THE COMBINED COMPANY

  

170

NASDAQ’S SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

  

178

SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS, DIRECTORS AND MANAGEMENT OF NASDAQ

  

179

COMPARISON OF RIGHTS OF HOLDERS OF NASDAQ COMMON STOCK AND OMX SHARES

  

184

EXPERTS

  

208

LEGAL MATTERS

  

208

FUTURE NASDAQ STOCKHOLDER PROPOSALS

  

208

IMPORTANT NOTICE REGARDING DELIVERY OF STOCKHOLDER DOCUMENTS

  

209

WHERE YOU CAN FIND MORE INFORMATION

  

210

INCORPORATION BY REFERENCE

  

210

OTHER MATTERS

  

211

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS OF OMX

   FIN-1
ANNEX A—Transaction Agreement   
ANNEX B—Form of Irrevocable Undertaking   
ANNEX C—Form of Voting Agreement   
ANNEX D—Opinion of J.P. Morgan Securities Inc.   
ANNEX E—Opinion of Morgan Stanley & Co. Limited   
ANNEX F—Opinion of Credit Suisse Securities (Europe) Limited   

 

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CERTAIN FREQUENTLY USED TERMS

Unless otherwise specified or if the context so requires:

 

   

“Charter Amendment” refers to an amendment to Nasdaq’s Restated Certificate of Incorporation to change Nasdaq’s name to “The NASDAQ OMX Group, Inc.” upon completion of the Offer as set forth in this Proxy Statement/Prospectus, and is also referred to as “Proposal Two”;

 

   

“combined company” refers to Nasdaq after the completion of the Offer and the combination of Nasdaq and OMX, and is also referred to as “The NASDAQ OMX Group, Inc.”;

 

   

“Irrevocable Undertakings” refers to the three Irrevocable Undertakings, each dated as of May 25, 2007, between each of Investor AB, Nordea Bank AB and Magnus Böcker, on the one hand, and Nasdaq, on the other hand;

 

   

“Irrevocable Undertakings Parties” refers to Investor AB, Nordea Bank AB and Magnus Böcker;

 

   

“Nasdaq” refers to The Nasdaq Stock Market, Inc., a Delaware corporation, and “we,” “us,” “our” and similar phrases refer to Nasdaq (before the completion of the Offer) or the combined company (after the completion of the Offer);

 

   

“Nasdaq Common Stock” refers to Nasdaq’s common stock, par value $0.01 per share;

 

   

“Nasdaq Voting Notes” refers to, collectively, Nasdaq’s 3.75% Series A convertible notes due 2012 and 3.75% Series B convertible notes due 2012;

 

   

“Nasdaq Voting Securities” refers to, collectively, Nasdaq Common Stock and Nasdaq Voting Notes;

 

   

“Nordic Exchange” means, collectively, the OMX Nordic Exchange Stockholm, the OMX Nordic Exchange Copenhagen, the OMX Nordic Exchange Helsinki, the OMX Nordic Exchange Iceland, the Tallinn Stock Exchange, the Riga Stock Exchange and the Vilnius Stock Exchange;

 

   

“Offer” refers to the offer by Nasdaq to acquire all of the outstanding shares of OMX;

 

   

“OMX” refers to OMX AB (publ), a public corporation organized under the laws of Sweden;

 

   

“OMX Shares” refers to shares of OMX;

 

   

“S.E.C.” refers to the United States Securities and Exchange Commission;

 

   

“SEK,” “Swedish Krona,” “Krona,” “Swedish Kronor” or “Kronor” refers to the lawful currency of Sweden;

 

   

“Share Issuance” refers to the issuance of up to 60,561,515 shares of Nasdaq Common Stock as set forth in this Proxy Statement/Prospectus, and is also referred to as “Proposal One”;

 

   

“Special Meeting” refers to the special meeting of the holders of Nasdaq Voting Securities to which this Proxy Statement/Prospectus relates;

 

   

“Takeover Rules” refers to the OMX Nordic Exchange Stockholm Rules Concerning Public Takeover Bids in the Stock Market (Sw. OMX Nordic Exchange Stockholm AB’s regler rörande offentliga uppköpserbjudanden på aktiemarknaden (2007-04-01)) and the Swedish Securities Council’s (Sw. Aktiemarknadsnämnden) rulings regarding the interpretation and application thereof, with which Nasdaq has, in a written undertaking to OMX Nordic Exchange Stockholm AB, agreed to comply;

 

   

“The NASDAQ Stock Market” refers to The NASDAQ Stock Market LLC, a wholly-owned subsidiary of Nasdaq;

 

   

“Transaction Agreement” refers to the Transaction Agreement, dated as of May 25, 2007, between Nasdaq and OMX;

 

   

“USD”, “$,” “U.S. dollars” or “U.S. $” refers to the lawful currency of the United States of America;

 

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“Voting Agreements” refers to the three Voting Agreements, each dated as of May 25, 2007, between affiliates of Hellman & Friedman LLC, affiliates of Silver Lake Partners and Nasdaq’s Chief Executive Officer, Robert Greifeld, on the one hand, and OMX on the other hand; and

 

   

“Voting Agreement Parties” refers to affiliates of Hellman & Friedman LLC, affiliates of Silver Lake Partners and Nasdaq’s Chief Executive Officer, Robert Greifeld.

QUESTIONS AND ANSWERS

Questions and Answers About the Nasdaq Special Meeting

What is the proposed transaction to which this Proxy Statement/Prospectus relates?

This Proxy Statement/Prospectus relates to the proposed combination of Nasdaq and OMX, which is being effected through the Offer. Completion of the Offer requires the approval by holders of Nasdaq Voting Securities of the issuance of up to 60,561,515 shares of Nasdaq Common Stock. We are also seeking the approval of holders of Nasdaq Voting Securities for an amendment to our Restated Certificate of Incorporation to change our name to “The NASDAQ OMX Group, Inc.” upon completion of the Offer.

When and where will the Special Meeting be held and what business will occur at the meeting?

The Special Meeting will be held at [·], on [·], 2007, at [· ]. At the Special Meeting, holders of Nasdaq Voting Securities will consider and vote upon the Share Issuance and the Charter Amendment. You do not need to be present at the Special Meeting to have your vote counted. By utilizing any one of the various voting procedures described in this Proxy Statement/Prospectus prior to the date of the Special Meeting, your vote will be counted and included in the final results.

How does Nasdaq’s Board of Directors recommend that holders of Nasdaq Voting Securities vote with respect to the proposals?

Nasdaq’s Board of Directors recommends a vote “for” approval of the Share Issuance and “for” approval of the Charter Amendment. Please see the sections entitled “Proposal One” and “Proposal Two.”

Why is it important for holders of Nasdaq Voting Securities to vote?

Nasdaq cannot complete the Offer unless the Share Issuance is approved by the affirmative vote of at least a majority of the votes present in person or represented by proxy at the Special Meeting and entitled to vote thereon.

Why are holders of Nasdaq Voting Securities being asked to approve the Share Issuance and the Charter Amendment?

Assuming that all outstanding OMX Shares are tendered into the Offer, we currently estimate that up to 60,561,515 shares of Nasdaq Common Stock, or approximately 28% of the Nasdaq Common Stock outstanding after completion of the Offer (calculated on a fully diluted basis using the treasury method), will be issued to OMX shareholders in connection with the Offer. The NASDAQ Stock Market rules require the approval of holders of Nasdaq Voting Securities prior to the issuance of additional shares of Nasdaq Common Stock in any transaction if:

 

  1. the common stock has, or will have upon issuance, voting power in excess of 20% of the voting power outstanding before the issuance of such stock or of securities convertible into or exercisable for common stock; or

 

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  2. the number of shares of common stock to be issued is, or will be upon issuance, in excess of 20% of the number of shares of common stock outstanding before the issuance of the common stock or of securities convertible into or exercisable for common stock.

Therefore, your approval is required for the Share Issuance (Proposal One).

In addition, as part of our agreement with OMX, we have committed to seek the vote of holders of Nasdaq Voting Securities to approve a change in our corporate name to “The NASDAQ OMX Group, Inc.” upon completion of the Offer to better reflect the combined company’s expanded global reach. The approval of the Charter Amendment (Proposal Two) is not required, however, to complete the Offer.

Who may vote at the Special Meeting?

Only holders of record listed on the books of Nasdaq at the close of business on [·], 2007, which we refer to as the Record Date, of the following Nasdaq securities will be entitled to notice of, and to vote at, the Special Meeting:

 

   

Nasdaq Common Stock; and

 

   

Nasdaq Voting Notes.

As of the Record Date, there were outstanding [·] shares of Nasdaq Common Stock (including shares of restricted Nasdaq Common Stock entitled to vote at the Special Meeting). As of the Record Date, the Nasdaq Voting Notes were convertible into [·] shares of Nasdaq Common Stock.

Are there different voting procedures depending on how I hold my Nasdaq Voting Securities?

Many holders of Nasdaq Voting Securities hold their Nasdaq Voting Securities through a stockbroker, bank or other nominee rather than directly in their own name. As summarized below, there are some distinctions between Nasdaq Voting Securities held of record and those owned beneficially.

Holder of Record

If your Nasdaq Voting Securities are registered directly in your name with Nasdaq’s transfer agent, Mellon Investor Services, you are considered, with respect to those Nasdaq Voting Securities, the holder of record, and these proxy materials are being sent directly to you by Nasdaq. As the holder of record, you have the right to grant your voting proxy directly to Nasdaq or to vote in person at the Special Meeting. Nasdaq has enclosed a proxy card for you to use.

Beneficial Owner

If your Nasdaq Voting Securities are held in a stock brokerage account or by a bank or other nominee, you are considered the beneficial owner of securities held in street name, and these proxy materials are being forwarded to you by your broker or nominee who is considered, with respect to those securities, the holder of record. As the beneficial owner, you have the right to direct your broker on how to vote and are also invited to attend the Special Meeting. Your broker or nominee has enclosed a voting instruction card for you to use in directing the broker or nominee regarding how to vote your securities. The voting instruction card provides various alternative voting methods, such as via the Internet, by telephone or by mail.

How many votes may a holder of Nasdaq Voting Securities cast?

Each share of Nasdaq Common Stock has one vote, subject to the voting limitation in our Restated Certificate of Incorporation that generally prohibits a holder from voting in excess of 5% of the total voting

 

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power of Nasdaq. The holder of each Voting Note is entitled to the number of votes equal to the number of shares of Nasdaq Common Stock into which that Voting Note could be converted on the Record Date, subject to the 5% voting limitation contained in our Restated Certificate of Incorporation. The enclosed proxy card shows the number of Nasdaq Voting Securities that you are entitled to vote. Your individual vote is confidential and will not be disclosed to third parties.

How can I vote my securities in person at the Special Meeting?

Securities held directly in your name as the holder of record may be voted in person at the Special Meeting. If you choose to do so, please bring the enclosed proxy card and proof of identification. Even if you plan to attend the Special Meeting, we recommend that you also submit your proxy as described below so that your vote will be counted if you later decide not to attend the Special Meeting. Securities held in street name may be voted in person by you only if you obtain a signed proxy from the record holder giving you the right to vote the securities in person.

How can I vote my Nasdaq Voting Securities without attending the Special Meeting?

Whether you hold securities directly as the holder of record or beneficially in street name, you may direct your vote without attending the Special Meeting. You may vote your directly held securities by granting a proxy or, for securities held in street name, by submitting voting instructions to your broker, bank or nominee following the instructions on the form included with this package by the deadline indicated on that form.

What vote is required to approve each item?

In order to conduct business at the Special Meeting, a quorum must be present. The presence of the holders of at least a majority (greater than 50%) of the votes entitled to be cast by holders of the Nasdaq Voting Securities constitutes a quorum. We will treat Nasdaq Voting Securities represented by a properly signed and returned proxy, including abstentions and broker non-votes, as present at the Special Meeting for the purposes of determining the existence of a quorum. If a quorum is not present, it is expected that the Special Meeting will be adjourned or postponed to solicit additional proxies.

Approval of the Share Issuance requires the affirmative vote of at least a majority of the votes present in person or represented by proxy at the Special Meeting and entitled to vote thereon.

Approval of the Charter Amendment requires the affirmative vote of at least a majority of our outstanding voting power.

What does it mean if I receive more than one proxy or voting instruction card?

It means that your securities are registered differently or are in more than one account. Please provide voting instructions for all proxy and voting instruction cards you receive.

May I change my vote after I have given it?

You may change your proxy instructions and your vote at any time prior to the vote at the Special Meeting. For securities held directly in your name, you may accomplish this by granting a new proxy bearing a later date, which automatically revokes the earlier proxy, and delivering such new proxy to the Secretary of Nasdaq either by mail or by calling the phone number, or accessing the Internet address, listed on the proxy card or by attending the Special Meeting and voting in person. Attendance at the Special Meeting will not cause your previously granted proxy to be revoked unless you specifically request to do so. For securities held beneficially by you, you may accomplish this by submitting new voting instructions to your broker, bank or nominee by the deadline indicated in the instructions sent to you by your broker, bank or nominee.

 

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Who bears the cost of soliciting proxies?

We will pay the entire cost of preparing, assembling, printing, mailing and distributing these proxy materials. In addition to the mailing of these proxy materials, the solicitation of proxies or votes may be made in person, by telephone or by electronic communication by our directors, officers and employees, who will not receive any additional compensation for such solicitation activities. We have retained the services of Mellon Investor Services LLC to aid in the solicitation of proxies from banks, brokers, nominees and intermediaries. We estimate that we will pay Mellon Investor Services LLC a fee of $12,500 for its services, plus out of pocket expenses. We will also, upon request, reimburse brokerage firms and other persons representing beneficial owners of Nasdaq Voting Securities for their expenses in forwarding solicitation materials to such beneficial owners.

How are votes counted?

For both proposals, you may vote “for,” “against” or “abstain.” If you “abstain,” it has the same effect as a vote “against” both the Share Issuance and the Charter Amendment. If you do not sign and send in your proxy card, do not vote using the telephone or Internet, or do not vote at the Special Meeting, it will have no effect on the vote on the Share Issuance, assuming that there is a quorum, but it will have the effect of a vote “against” the Charter Amendment. If you sign your proxy card or broker voting instruction card with no further instructions, your Nasdaq Voting Securities will be voted in accordance with the recommendations of the Board of Directors described in this proxy. Unless you give other instructions on your proxy card, the persons named as proxy holders on the proxy card will vote in accordance with the recommendations of the Board of Directors. With respect to any other matter that properly comes before the meeting, the proxy holders will vote as recommended by the Board of Directors or, if no recommendation is given, in their own discretion.

If my securities are held in “Street Name” by my broker, will my broker vote my Nasdaq Voting Securities for me?

Included with this package, you should have received from your broker a voting instruction card with instructions on how to vote your securities and how to provide instructions to your broker on how you want your securities voted. If you have any questions regarding the procedures necessary for your broker to vote your securities, you should contact your broker directly. Please instruct your broker as to how you would like him or her to vote your securities following the procedures on the instruction card.

What are “Broker non-votes”?

Broker non-votes are securities held by banks, brokers or nominees for which, with respect to any item to be voted upon, voting instructions have not been received from the beneficial owners or the persons entitled to vote those securities and with respect to which the bank, broker or nominee does not have discretionary voting power under rules applicable to broker-dealers. Broker non-votes, if any, will have no effect on the vote on the Share Issuance, assuming that there is a quorum, but will have the effect of a vote “against” the Charter Amendment.

What do holders of Nasdaq Voting Securities need to do now?

After carefully reading and considering the information contained in this Proxy Statement/Prospectus, you should either complete, sign and date your proxy card and voting instructions and return them in the enclosed postage-paid envelope, vote by phone or by the Internet as provided for on the voting instruction card included in this package, or vote in person at the Special Meeting. You can simplify your voting and save Nasdaq expense by either voting via the Internet or calling the toll-free number listed on the proxy card. Please vote your securities as soon as possible so that your securities will be represented at the Special Meeting.

Where can I find the voting results of the Special Meeting?

We may be able to announce preliminary voting results at the Special Meeting and we may issue a press release with the final results after the Special Meeting is completed. In addition, we intend to publish the final results in our quarterly report on Form 10-Q for the third quarter of fiscal year 2007.

 

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What will happen if Proposal One or Proposal Two is not approved?

If Proposal One is not approved, the Offer cannot proceed. If Proposal Two is not approved, the Offer may proceed, but Nasdaq is obligated under the terms of its agreement with OMX to take such actions as reasonably requested by OMX to ensure that Nasdaq Common Stock trades under the name “NASDAQ OMX Group” following completion of the Offer.

Are there risks associated with the Offer that holders of Nasdaq Voting Securities should be aware of?

Yes. The combined company may not achieve the expected benefits because of the risks and uncertainties discussed in the section entitled “Risk Factors.” In deciding whether to approve the Share Issuance or the Charter Amendment, Nasdaq urges you to carefully read and consider the risk factors contained in the section entitled “Risk Factors.”

Who should I contact if I have questions about the Special Meeting?

If you have questions about the Special Meeting, please contact Mellon Investor Services LLC toll-free at 1-866-374-7270.

Questions and Answers About the Offer

What will OMX shareholders receive in the Offer?

Nasdaq is offering each OMX shareholder:

 

   

In respect of 45.32% of the total number of OMX Shares tendered by such shareholder, SEK 208.1 per OMX Share in cash; and

 

   

In respect of the remaining 54.68% of the number of OMX Shares tendered by such shareholder, 0.918 new shares of Nasdaq Common Stock per OMX Share.

We refer to this combination of consideration in respect of the OMX Shares held by each OMX shareholder as the Basic Alternative. As an alternative, OMX shareholders who on May 31, 2007 were registered in the register of shareholders kept by the Swedish VPC AB, the Danish Værdipapircentralen A/S, the Finnish Suomen Arvopaperikeskus Oy or the Icelandic Verðbréfaskráning Íslands hf. as holders of 200 or fewer OMX Shares and who accept the Offer are entitled to elect to receive a guaranteed cash consideration of SEK 208.1 per OMX Share as consideration for their entire holding (and not parts of their holding) of OMX Shares, which we refer to as the Cash Guarantee. For the avoidance of doubt, if such OMX shareholders acquire additional shares after May 31, 2007, these shareholders will not be entitled to elect to receive the Cash Guarantee with respect to the additional shares so acquired.

Nasdaq is also offering OMX shareholders who accept the Offer prior to the Offer being declared unconditional a mix and match option, which we refer to as the Mix and Match Facility. The Mix and Match Facility will enable OMX shareholders to elect to exchange a higher proportion of their OMX Shares in return for cash or to exchange a higher proportion of their OMX Shares in exchange for Nasdaq Common Stock, subject to matching elections by other OMX shareholders.

Please note that certain numbers used throughout this Proxy Statement/Prospectus have been rounded. The actual numbers that will be used to calculate the entitlement of accepting OMX shareholders are: (i) for the rounded number of 45.32%, the actual number will be 45.3153567130646%; (ii) for the rounded number of 54.68%, the actual number will be 54.6846432869354%; and (iii) for the rounded number of 0.918 new shares of Nasdaq Common Stock, the actual number will be 0.917990810264518 new shares of Nasdaq Common Stock.

Does OMX’s Board of Directors recommend that OMX shareholders accept the Offer?

OMX’s Board of Directors has unanimously recommended that the OMX shareholders accept the Offer. Please see the section entitled “Recommendation of OMX’s Board of Directors” on page 53.

 

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How do OMX shareholders tender their shares in the Offer?

OMX shareholders that are either located in the United States or that are U.S. persons must carefully read the section of this Proxy Statement/Prospectus entitled “Terms of the Offer” and must complete the acceptance form which is attached as an exhibit to this Proxy Statement/Prospectus.

Are there any conditions to the Offer?

The Offer is subject to certain conditions more fully described in the section “Conditions to the Offer” on page 88.

How will Nasdaq acquire any OMX Shares that remain outstanding after the completion of the Offer?

Assuming that Nasdaq holds more than 90% of the outstanding OMX Shares following completion of the Offer, Nasdaq intends to initiate compulsory acquisition proceedings under Swedish law to acquire the OMX Shares that were not acquired in the Offer. For a detailed discussion of Swedish compulsory acquisition proceedings, please see the section entitled “Special Considerations—Compulsory Acquisition Proceedings, Subsequent Share Purchases and De-listing” on page 101.

How much of Nasdaq will current OMX shareholders own upon completion of the Offer?

Immediately following the completion of the Offer, assuming that all outstanding OMX Shares are tendered into the Offer and based upon the number of outstanding shares of Nasdaq Common Stock and OMX Shares, we estimate that OMX shareholders will hold approximately 28% of the total shares of Nasdaq Common Stock outstanding after the Offer calculated on a fully diluted basis using the treasury method.

When do you expect the Offer to expire?

This Proxy Statement/Prospectus is being mailed to U.S. OMX shareholders on [·], 2007, and the Offer will expire at 5:00 p.m. Central European Time, which we refer to as CET, on [·], 2007, subject to extension. Nasdaq reserves the right to extend the acceptance period for the Offer in accordance with the Takeover Rules. Promptly following the expiration of the Offer, Nasdaq will issue a press release notifying the public of the outcome of the Offer. For a more complete discussion of the timing of the Offer, please see the section entitled “The Offer” on page 47.

Are there risks associated with the Offer that OMX shareholders should be aware of?

Yes. The combined company may not achieve the expected benefits because of the risks and uncertainties discussed in the section entitled “Risk Factors” beginning on page 21. In deciding whether to accept the Offer, Nasdaq urges you to carefully read and consider the risk factors contained in the section entitled “Risk Factors.”

How do I participate in the Offer?

For detailed information on how U.S. OMX shareholders can participate in the Offer, please see the section entitled “Acceptance Procedure” beginning on page 92.

Who should I contact if I have questions about the Offer?

If you have questions about the Offer, please contact [·].

 

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SUMMARY OF THE OFFER

This section highlights selected information from this Proxy Statement/Prospectus and may not contain all of the information that is important to you. To better understand the proposed transactions, you should read this entire Proxy Statement/Prospectus carefully, as well as those additional documents to which we refer you. You may obtain more information by following the instructions in the section entitled “Where You Can Find More Information” on page 210. We have included page references to direct you to more complete descriptions of the topics presented in this summary.

The Nasdaq Stock Market, Inc.

We are a holding company that operates The NASDAQ Stock Market as a wholly-owned subsidiary and operates certain other related businesses through other subsidiaries. We became a holding company on August 1, 2006 when The NASDAQ Stock Market commenced operations as a registered national securities exchange for Nasdaq-listed securities.

We, through our subsidiaries, are a leading provider of securities listing, trading, and information products and services. Our revenue sources are diverse and include revenues from transaction services, market data products and services, listing fees, insurance products, shareholder and newswire services and financial products. The NASDAQ Stock Market is the largest electronic equity securities market in the United States, both in terms of number of listed companies and traded share volume. As of June 30, 2007, The NASDAQ Stock Market was home to approximately 3,200 listed companies with a combined market capitalization of over $4.6 trillion. We also operate, through The NASDAQ Stock Market, The Nasdaq Market Center, which provides our market participants with the ability to access, process, display and integrate orders and quotes in The NASDAQ Stock Market and other national securities exchanges in the United States. Transactions involving 349.9 billion equity securities were executed on or reported to our systems in the first six months of 2007, 20% higher than the same period in 2006.

For the six months ended June 30, 2007, based on financial statements prepared in accordance with accounting principles generally accepted in the United States, or U.S. GAAP, Nasdaq generated $1,120.1 million in total revenues and $74.4 million in net income.

Nasdaq Common Stock is listed on the Nasdaq Global Select Market under the symbol “NDAQ.” We maintain our principal executive offices at One Liberty Plaza, New York, New York 10006. Its telephone number is (212) 401-8700, and its Internet address is www.nasdaq.com. Information contained on our website does not constitute part of this Proxy Statement/Prospectus.

OMX AB (publ) (Page 105)

OMX owns and operates exchanges in Sweden, Finland, Denmark, Iceland, Estonia, Latvia and Lithuania and provides technology solutions to exchanges and other marketplaces. OMX was established as OM Gruppen AB in 1984 in Stockholm, Sweden and today over 800 companies are traded on the Nordic Exchange (including its alternative market, First North). OMX’s technology solutions enable efficient securities transactions for more than 60 marketplaces in over 50 countries.

OMX operates in three business areas: Nordic Marketplaces, Information Services & New Markets and Market Technology. The Nordic Marketplaces business area constituted approximately 46% of OMX’s revenues for the year ended December 31, 2006 (calculated based on the revenues for the business area in question divided by the sum of revenues for all three business areas) and comprises OMX’s exchange operations in Sweden, Finland, Denmark and Iceland. The Information Services & New Markets business area constituted approximately 20% of OMX’s revenues for the year ended December 31, 2006 and comprises OMX’s

 

 

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information services, its exchanges and central securities depositories, which we refer to as CSDs, in the Baltic States and its business unit Broker Services. The Market Technology business area constituted approximately 34% of OMX’s revenues for the year ended December 31, 2006 and comprises the delivery of technology and services to marketplaces throughout the world.

For the six months ended June 30, 2007, based on financial statements prepared in accordance with International Financial Reporting Standards, which we refer to as IFRS, OMX generated SEK 2,079 million in revenues and SEK 603 million in net profit.

OMX Shares are listed on the Nordic Exchange under the symbol “OMX.” The address of OMX’s registered office is SE-105 78, Stockholm, Sweden, and its telephone number is +46 8 405 60 00. Its website is www.omxgroup.com. Information contained on OMX’s website does not constitute part of this Proxy Statement/Prospectus.

The Offer (Page 47)

Nasdaq and OMX have proposed to combine their businesses in a strategic transaction in which Nasdaq will acquire all of the outstanding OMX Shares. In respect of 45.32% of the total number of OMX Shares tendered by each OMX shareholder, we are offering SEK 208.1 per OMX Share in cash, which we refer to as the Cash Consideration, and in respect of the remaining 54.68% OMX Shares tendered by each OMX shareholder, we are offering 0.918 new shares of Nasdaq Common Stock per OMX Share, which we refer to as the Share Consideration (which number of shares of Nasdaq Common Stock had a value of approximately SEK 208.1 on May 23, 2007, the last full trading day before the announcement of the Offer, based on the closing price of Nasdaq Common Stock of $33.19 per share and a SEK/USD exchange rate of 6.83). Nasdaq is offering OMX shareholders who accept the Offer prior to the Offer being declared unconditional the Mix and Match Facility, which will enable OMX shareholders to elect to exchange a higher proportion of their OMX Shares in return for the Cash Consideration or the Share Consideration, subject to matching elections by other OMX shareholders. As an alternative, OMX shareholders who on May 31, 2007 were registered in the register of shareholders kept by the Swedish VPC AB, the Danish Værdipapircentralen A/S, the Finnish Suomen Arvopaperikeskus Oy or the Icelandic Verðbréfaskráning Íslands hf. as holders of 200 or fewer OMX Shares and who accept the Offer are entitled to elect to receive the Cash Guarantee of SEK 208.1 per OMX Share as consideration for their entire holding (and not parts of their holding) of OMX Shares. For the avoidance of doubt, if such OMX shareholders acquire additional OMX Shares after May 31, 2007, these shareholders will not be entitled to elect to receive the Cash Guarantee with respect to the additional OMX Shares so acquired.

In this Proxy Statement/Prospectus, Nasdaq is offering to acquire all of the outstanding OMX Shares held by persons that are either located in the United States or U.S. persons, wherever located. This Proxy Statement/Prospectus is not authorized to be distributed to, nor is the Offer made pursuant to this Proxy Statement/Prospectus capable of being accepted by, anyone that is not either located in the United States or a U.S. person. Certification to that effect will be required in the acceptance form required to be submitted by U.S. OMX shareholders to accept the U.S. offer.

Assuming that all outstanding OMX Shares are tendered into the Offer, we currently estimate that approximately 28% of the shares of Nasdaq Common Stock outstanding after completion of the Offer will be held by current OMX shareholders and that approximately 72% of the shares of Nasdaq Common Stock outstanding after completion of the Offer will be held by current Nasdaq shareholders, in both cases calculated on a fully diluted basis using the treasury method.

Please note that certain numbers used throughout this Proxy Statement/Prospectus have been rounded. The actual numbers that will be used to calculate the entitlement of accepting OMX shareholders are: (i) for the rounded number of 45.32%, the actual number will be 45.3153567130646%; (ii) for the rounded number of 54.68%, the actual number will be 54.6846432869354%; and (iii) for the rounded number of 0.918 new shares of Nasdaq Common Stock, the actual number will be 0.917990810264518 new shares of Nasdaq Common Stock.

 

 

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Why You are Receiving this Proxy Statement/Prospectus

Holders of Nasdaq Voting Securities (Page 45)

In order to complete the Offer, at the Special Meeting to be held on [·], 2007, holders of Nasdaq Voting Securities must approve the Share Issuance and will also be asked to approve the Charter Amendment.

U.S. OMX Shareholders (Page 91)

This Proxy Statement/Prospectus also describes the Offer and provides OMX shareholders that are located in the United States or that are U.S. persons the means to tender their shares in connection with the Offer.

Nasdaq’s and OMX’s Reasons for the Offer (Page 49)

Holders of Nasdaq Voting Securities

Based on the reasons for the Offer described in this Proxy Statement/Prospectus, Nasdaq’s Board of Directors has unanimously recommended that holders of Nasdaq Voting Securities vote “for” the Share Issuance and “for” the Charter Amendment.

U.S. OMX Shareholders

Based on the reasons for the Offer described in this Proxy Statement/Prospectus, OMX’s Board of Directors has unanimously recommended that shareholders of OMX accept the Offer.

What OMX Shareholders will Receive in the Offer (Page 87)

We are offering consideration equivalent to 0.502 shares of Nasdaq Common Stock and SEK 94.3 for each OMX Share that is validly tendered and not properly withdrawn. In particular, in respect of 45.32% of the total number of OMX Shares tendered by each OMX shareholder, we are offering SEK 208.1 per OMX Share in cash and in respect of the remaining 54.68% OMX Shares tendered by each OMX shareholder, we are offering 0.918 new shares of Nasdaq Common Stock per OMX Share (which number of shares of Nasdaq Common Stock had a value of approximately SEK 208.1 on May 23, 2007, the last full trading day before the announcement of the Offer, based on the closing price of Nasdaq Common Stock of $33.19 per share and a SEK/USD exchange rate of 6.83). Fractional shares of Nasdaq Common Stock will not be issued to OMX shareholders; instead, such fractional shares will be sold in the public markets and the net proceeds will be distributed proportionally to the OMX shareholders concerned. As an alternative, OMX shareholders who on May 31, 2007 held 200 or fewer OMX Shares are entitled to elect to receive a guaranteed cash consideration of SEK 208.1 per OMX Share in exchange for those OMX Shares held on May 31, 2007.

Mix and Match Facility (Page 89)

Nasdaq is offering OMX shareholders who accept the Offer prior to the Offer being declared unconditional the Mix and Match Facility, which will enable OMX shareholders to elect to exchange a higher proportion of their OMX Shares in return for Cash Consideration or Share Consideration, subject to matching elections by other OMX shareholders.

Principal Agreements (Page 82)

We and OMX have entered into the Transaction Agreement, which sets forth the terms and conditions of the Offer, as well as the composition of the board of directors and management team for the combined company. The Transaction Agreement also contains certain prohibitions against the solicitation or entertainment of competing proposals on the part of both Nasdaq or OMX.

 

 

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In connection with the Offer, Investor AB, Nordea Bank AB and Magnus Böcker have executed the Irrevocable Undertakings in favor of Nasdaq, pursuant to which Investor AB, Nordea Bank AB and Magnus Böcker have agreed, among other things, to tender their shares in the Offer, elect to receive Nasdaq Common Stock under the Mix and Match Facility and support the Offer.

In connection with the Offer, affiliates of Hellman & Friedman LLC, affiliates of Silver Lake Partners and Nasdaq’s Chief Executive Officer, Robert Greifeld, have executed the Voting Agreements in favor of OMX, pursuant to which they have agreed, among other things, to vote in favor of the Share Issuance and the Charter Amendment.

Approval by Holders of Nasdaq Voting Securities (Page 45)

Approval of the Share Issuance requires the affirmative vote of at least a majority of the votes present in person or represented by proxy at the Special Meeting and entitled to vote thereon. Approval of the Charter Amendment requires the affirmative vote of at least a majority of our outstanding voting power.

At the close of business on the Record Date, directors and executive officers of Nasdaq and their affiliates beneficially owned and were entitled to vote approximately [·]% of the [·] votes attributable to Nasdaq Voting Securities outstanding on that date and directors and executive officers of OMX and their affiliates beneficially owned and were entitled to vote approximately [·]% of the [·] OMX Shares on that date.

Opinions of Financial Advisors

Opinion of J.P. Morgan Securities Inc. (Page 55)

At a meeting of Nasdaq’s Board of Directors on May 24, 2007, J.P. Morgan Securities Inc., which we refer to as JPMorgan, rendered its oral opinion to Nasdaq’s Board of Directors that, as of that date and based upon and subject to the factors and assumptions set forth in its opinion, the consideration to be paid by Nasdaq in the Offer was fair, from a financial point of view, to Nasdaq. JPMorgan confirmed its oral opinion by delivering to Nasdaq’s Board of Directors a written opinion dated May 24, 2007. The full text of the written opinion of JPMorgan, which sets forth, among other things, the assumptions made, procedures followed, matters considered and limitations on the review undertaken by JPMorgan in connection with its opinion, is attached to this Proxy Statement/Prospectus as Annex D and is incorporated in this Proxy Statement/Prospectus by reference. Holders of Nasdaq Voting Securities should read this opinion carefully and in its entirety. JPMorgan’s opinion is directed to Nasdaq’s Board of Directors and addresses only the fairness, from a financial point of view, of the consideration to be offered by Nasdaq in the Offer. JPMorgan’s opinion does not address the underlying decision by Nasdaq to make the Offer and is not a recommendation as to how any holder of Nasdaq Voting Securities should vote with respect to the Offer or any other matter or whether any OMX shareholder should accept the Offer.

Opinions of Morgan Stanley & Co. Limited and Credit Suisse Securities (Europe) Limited (Page 63)

In connection with the Offer, OMX’s Board of Directors received separate written opinions from OMX’s financial advisors, Morgan Stanley & Co. Limited, which we refer to as Morgan Stanley, and Credit Suisse Securities (Europe) Limited, which we refer to as Credit Suisse, that the consideration to be received by the holders of OMX Shares pursuant to the Offer was fair, from a financial point of view, to such holders. The full text of the written opinions of Morgan Stanley and Credit Suisse, each dated May 24, 2007, are included as Annex E and Annex F, respectively, to this document and are incorporated herein by reference. Holders of OMX Shares should read the opinions carefully in their entirety for descriptions of the assumptions made, the matters considered and limitations on the reviews undertaken. Morgan Stanley and Credit Suisse addressed their opinions to OMX’s Board of Directors, and the opinions do not constitute recommendations to any shareholder as to

 

 

4


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whether such shareholder should tender OMX Shares in the Offer, or any election such shareholder should make in connection with the Mix and Match Facility, or any other action that a shareholder should take relating to the Offer.

Risk Factors (Page 21)

In deciding how to vote your Nasdaq Voting Securities on the matters described in this Proxy Statement/Prospectus or whether to tender your OMX Shares in the Offer, you should carefully consider the risks related to the Offer and Nasdaq’s and OMX’s businesses, respectively.

Conditions to the Offer (Page 88)

The Offer is subject to a number of conditions described in more detail later in this Proxy Statement/Prospectus.

Termination of the Transaction Agreement (Page 84)

The Transaction Agreement:

 

   

may be terminated by written consent of both Nasdaq and OMX;

 

   

may be terminated by either OMX or Nasdaq if the Offer lapses or is withdrawn;

 

   

may be terminated by either OMX or Nasdaq if the Offer is not declared unconditional by February 29, 2008; and

 

   

will automatically terminate if either the recommendation of OMX’s Board of Directors (with respect to the Offer) or the recommendation of Nasdaq’s Board of Directors (with respect to approval of the Share Issuance or the Charter Amendment) is withdrawn in accordance with the Transaction Agreement.

Payment of Termination Fee (Page 84)

If either party is in breach of its obligations under the Transaction Agreement (other than in immaterial respects), it must pay the other party’s costs, fees and expenses incurred in connection with the Offer up to a maximum of $15,000,000.

No Solicitation of Transactions (Page 82)

Each of Nasdaq and OMX has agreed that it will not, among other things:

 

   

solicit, initiate, encourage, induce or facilitate an alternative acquisition proposal for itself;

 

   

furnish information regarding itself to a third party in connection with or in response to an alternative acquisition proposal or an inquiry or indication of interest that could reasonably be expected to lead to an alternative acquisition proposal; or

 

   

engage in any discussions or negotiations with any third party with respect to an alternative acquisition proposal,

unless, in the case of the second and third bullets above, a party receives a bona fide unsolicited written alternative acquisition proposal and:

 

   

such party and its representatives have not violated any of the non-solicitation provisions in the Transaction Agreement;

 

 

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a majority of such party’s board of directors (after consultation with its financial advisors and outside legal counsel) determines that such proposal is or is reasonably likely to result in a superior proposal to the transactions contemplated by the Transaction Agreement; and

 

   

such party’s board of directors concludes, after consultation with its financial advisors and outside legal counsel, that a failure to take such action would reasonably be likely to be inconsistent with the party’s board’s fiduciary obligations to its shareholders.

Interests of Certain Persons in the Offer (Page 70)

Certain directors and executive officers of OMX have interests in the Offer that may be in addition to or different from those of OMX shareholders as described in more detail in this Proxy Statement/Prospectus.

Material U.S. Federal Income Tax Consequences (Page 71)

The receipt of cash and shares of Nasdaq Common Stock in exchange for OMX Shares pursuant to the Offer will be a taxable transaction to OMX shareholders who are U.S. holders for U.S. federal income tax purposes.

Anticipated Accounting Treatment of the Offer (Page 79)

The acquisition of OMX Shares by Nasdaq in the Offer (and in any subsequent transaction such as compulsory acquisition proceedings) will be accounted for under the purchase method of accounting in accordance with U.S. GAAP. From the date of the completion of the Offer, the combined company’s results of operations will include OMX’s operating results and OMX’s assets and liabilities, including identifiable intangible assets, at fair value with the excess allocated to goodwill.

Regulatory Matters (Page 81)

Certain approvals from, or filings with, regulatory authorities are required in connection with the Offer.

Directors and Management of the Combined Company Following the Completion of the Offer (Page 86)

Following completion of the Offer, Nasdaq’s Chief Executive Officer (currently Robert Greifeld) will serve as Chief Executive Officer of the combined company and OMX’s Chief Executive Officer (currently Magnus Böcker) will serve as President of the combined company. Following completion of the Offer, the combined company’s board of directors will consist of fifteen directors, comprised of (i) nine individuals from (or nominated by) Nasdaq’s Board of Directors as of immediately prior to completion of the Offer, (ii) Nasdaq’s Chief Executive Officer and (iii) five individuals from (or proposed for nomination by) OMX’s Board of Directors as of immediately prior to completion of the Offer.

Appraisal Rights (Page 79)

Under Delaware law and Nasdaq’s Restated Certificate of Incorporation, holders of Nasdaq Voting Securities are not entitled to any rights to seek appraisal of their securities or to exercise any preemptive rights in connection with the proposal to issue shares of Nasdaq Common Stock in connection with the Offer. Under Swedish law and OMX’s Articles of Association, OMX shareholders are not entitled to any rights to seek appraisal of their OMX Shares or to exercise any preemptive rights in connection with the Offer, though certain related rights exist in connection with the compulsory acquisition proceedings described on page 101.

 

 

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Compulsory Acquisition Proceedings (Page 101)

Pursuant to Swedish law, if Nasdaq acquires more than 90% of the outstanding OMX Shares, Nasdaq intends to initiate compulsory acquisition proceedings under Swedish law to acquire the OMX Shares that were not tendered in the Offer.

Comparison of Shareholder Rights (Page 184)

Nasdaq is incorporated in the State of Delaware, and the rights of Nasdaq shareholders are governed by the Delaware General Corporation Law and by Nasdaq’s Restated Certificate of Incorporation and By-Laws. OMX is organized under the laws of Sweden and the rights of OMX shareholders are currently governed by Swedish law and OMX’s Articles of Association. After the completion of the Offer, shareholders of OMX who receive Nasdaq Common Stock in the Offer will become shareholders of the combined company, and will become subject to the Restated Certificate of Incorporation and By-Laws of Nasdaq.

 

 

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SUMMARY SELECTED CONSOLIDATED FINANCIAL INFORMATION OF NASDAQ

The following table sets forth summary selected historical consolidated financial data of Nasdaq, which should be read in conjunction with the consolidated financial statements of Nasdaq and the notes thereto and the discussion under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included as part of Nasdaq’s Annual Report on Form 10-K for the fiscal year ended December 31, 2006 incorporated by reference into this Proxy Statement/Prospectus. The financial data for the five years ended December 31, 2006 has been derived from the audited consolidated financial statements of Nasdaq. The financial data as of and for the six months ended June 30, 2007 and 2006 has been derived from the unaudited condensed consolidated financial statements of Nasdaq included as part of Nasdaq’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2007 incorporated by reference into this Proxy Statement/Prospectus. In the opinion of Nasdaq’s management, the unaudited information has been prepared on substantially the same basis as the consolidated financial statements appearing elsewhere in this Proxy Statement/Prospectus and includes all adjustments (consisting of normal recurring adjustments) necessary for a fair statement of the unaudited consolidated data for the six months ended June 30, 2007 and 2006. The historical financial and operating information may not be indicative of our future performance.

 

    Year Ended December 31,     Six Months Ended
June 30,
 
    2006     2005     2004     2003     2002     2007     2006  
    (in thousands, except share and per share amounts)     (unaudited)  

Statements of Income:

             

Total revenues(1)

  $ 1,657,776     $ 879,919     $ 540,441     $ 589,845     $ 787,154     $ 1,120,147     $ 807,478  

Cost of revenues(1)

    (970,381 )     (353,908 )     (55,845 )     —         —         (729,401 )     (474,310 )
                                                       

Revenues less liquidity rebates, brokerage, clearance and exchange fees

    687,395       526,011       484,596       589,845       787,154       390,746       333,168  

Total expenses

    473,306       412,348       476,413       647,159       675,307       210,445       255,028  

Net income (loss) from continuing operations

    127,893       61,690       1,804       (45,112 )     65,021       74,445       34,632  

Net income (loss) from discontinued operations, net of taxes(2)

    —         —         9,558       (60,335 )     (21,893 )     —         —    

Net income (loss)

    127,893       61,690       11,362       (105,447 )     43,128       74,445       34,632  

Net income (loss) applicable to common shareholders

    127,203       55,093       (1,826 )     (113,726 )     33,363       74,445       33,942  

Basic and diluted earnings (loss) per share:

             

Basic earnings (loss) per share:

             

Continuing operations

  $ 1.22     $ 0.68     $ (0.14 )   $ (0.68 )   $ 0.66     $ 0.66     $ 0.35  

Discontinued operations

    —         —         0.12       (0.77 )     (0.26 )     —         —    
                                                       

Total basic earnings (loss) per share

  $ 1.22     $ 0.68     $ (0.02 )   $ (1.45 )   $ 0.40     $ 0.66     $ 0.35  
                                                       

Diluted earnings (loss) per share:

             

Continuing operations

  $ 0.95     $ 0.57     $ (0.14 )   $ (0.68 )   $ 0.66     $ 0.52     $ 0.28  

Discontinued operations

    —         —         0.12       (0.77 )     (0.26 )     —         —    
                                                       

Total diluted earnings (loss) per share

  $ 0.95     $ 0.57     $ (0.02 )   $ (1.45 )   $ 0.40     $ 0.52     $ 0.28  
                                                       

Weighted average common shares outstanding for earnings (loss) per share:

             

Basic

    104,311,040       80,543,397       78,607,126       78,378,376       83,650,478       112,591,524       96,584,440  

Diluted

    144,228,855       111,913,715       78,607,126       78,378,376       84,073,381       151,827,867       137,049,831  
    December 31,     June 30,  
    2006     2005     2004     2003     2002     2007     2006  
    (in thousands)     (unaudited)  

Balance Sheets:

             

Cash and cash equivalents and available-for-sale investments(3)

  $ 1,950,204     $ 344,606     $ 233,099     $ 334,633     $ 423,588     $ 2,269,982     $ 1,704,342  

Total assets(4)

    3,716,452       2,046,786       814,820       851,254       1,175,914       4,005,313       3,415,234  

Total long-term liabilities(4)

    1,798,466       1,467,453       449,941       452,927       636,210       1,780,053       1,894,669  

Total shareholders’ equity(4)

    1,457,355       253,007       156,563       160,696       270,872       1,602,972       1,178,791  

(1)

Pursuant to Emerging Issues Task Force, which we refer to as EITF, of the Financial Accounting Standards Board, which we refer to as FASB, Issue No. 99-19, “Reporting Revenue Gross as a Principal versus Net as an Agent,” which we refer to as EITF 99-19, we record execution revenues from transactions on a gross basis in revenues and record related expenses such as liquidity rebate payments and

 

 

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execution costs as cost of revenues. We have recorded execution revenues related to the Brut and INET platforms on a gross basis since the related acquisitions, as Brut and INET have historically had risk as principal on transactions executed through their respective platforms. On February 1, 2006, Brut and INET merged together into a single broker-dealer, Brut, LLC, which was later renamed, Nasdaq Execution Services, LLC. Starting with the second quarter of 2005, we have reported execution revenues from transactions on our legacy platform on a gross basis in revenues and reported related expenses as cost of revenues, as we have certain risk associated with trade execution, subject to rule limitations and caps, as a result of our Limitation of Liability Rule, pursuant to which we may provide compensation for losses due to malfunctions of our order-execution systems. This change in presentation was implemented on a prospective basis beginning April 1, 2005 as required under U.S. GAAP as a direct result of the rule change. This rule change did not have a material impact on the consolidated financial position or results of operations of Nasdaq.

 

(2)

Net of tax provision (benefit) for income taxes of $5,595 in 2004, $(3,663) in 2003 and $128 in 2002.

 

(3)

Includes our investment in the London Stock Exchange Group plc, which we refer to as the LSE, accounted for in accordance with Statement of Financial Accounting Standards, which we refer to as SFAS, No. 115 “Accounting for Certain Investments in Debt and Equity Securities,” which we refer to as SFAS 115, at December 31, 2006. See Note 7, “Investments,” to the consolidated financial statements in our Form 10-K for the year ended December 31, 2006 which are incorporated by reference in this Proxy Statement/Prospectus for further discussion.

 

(4)

Includes continuing and discontinued operations for 2003 and 2002.

 

 

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SUMMARY SELECTED CONSOLIDATED FINANCIAL INFORMATION OF OMX

The following table sets forth summary selected historical consolidated financial data of OMX, which should be read in conjunction with the consolidated financial statements of OMX and the notes thereto and the discussion under “Management’s Discussion and Analysis of Financial Condition and Results of Operations of OMX” included in this Proxy Statement/Prospectus. The selected balance sheet data as of December 31, 2004, 2005 and 2006 and the selected income statement data for each of the years in the three-year period ended December 31, 2006 have been derived from the audited consolidated financial statements and related notes set forth on pages FIN-17 to FIN-90. The selected balance sheet data as of June 30, 2007 and selected income statement data for the six months ended June 30, 2006 and 2007 have been derived from the unaudited consolidated financial statements and related notes set forth on pages FIN-2 to FIN-15. The selected balance sheet data as of December 31, 2002 and 2003 and the selected income statement data for each of the years in the two-year period ended December 31, 2003 have been derived from audited consolidated financial statements and related notes not included in this Proxy Statement/Prospectus. The selected balance sheet data as of June 30, 2007 and the operating data for the six months ended June 30, 2006 and 2007 include, in the opinion of OMX’s management, all adjustments considered necessary for a fair statement of such data. The results of operations for the six months ended June 30, 2007 and 2006 are not necessarily indicative of results that may be expected for the entire year, nor is the information below necessarily indicative of OMX’s future performance.

OMX’s consolidated financial statements have been prepared in accordance with IFRS, which differ in certain material respects from U.S. GAAP. For a description of the principal differences between IFRS and U.S. GAAP as they relate to OMX and to its consolidated subsidiaries, and for a reconciliation of OMX’s shareholders’ equity and net income to U.S. GAAP, see Note 36 to the audited consolidated financial statements on pages FIN-84 to FIN-90, and Note 8 to the unaudited interim condensed consolidated financial statements on pages FIN-9 to FIN-15. All financial data for 2003 and 2002 are presented in accordance with Swedish GAAP. U.S. GAAP shareholders’ equity and net income data presented in the following tables has been derived from these Notes. Other U.S. GAAP data presented in the following tables has been derived from unaudited analyses prepared by OMX from its accounting records.

 

 

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    Six months ended
June 30,
    Year ended December 31,  
(IFRS)   2007(1)     2006(1)     2006(1)     2005(1)(8)     2004(1)  
    (in millions of SEK, except per share amounts)  

Results of Operations:

         
Results of Operations from Continuing Operations:          

Revenues

         

Net sales

  1,899    

1,643

 

 

3,313

 

 

2,969

 

 

2,576

 

Own work capitalized

  79    

48

 

 

68

 

 

125

 

 

74

 

Other revenues

  101    

22

 

 

105

 

 

—  

 

 

119

 

                             

Total revenues

  2,079    

1,713

 

 

3,486

 

 

3,094

 

 

2,769

 

Expenses:

         

Premises expenses

  (88 )  

(101

)

 

(204

)

 

(189

)

 

(308

)

Marketing expenses

  (31 )  

(23

)

 

(63

)

 

(40

)

 

(38

)

Consultancy expenses

  (183 )  

(150

)

 

(310

)

 

(253

)

 

(195

)

Operations and maintenance, IT

  (117 )  

(102

)

 

(239

)

 

(225

)

 

(254

)

Other external expenses

  (121 )  

(78

)

 

(167

)

 

(201

)

 

(302

)

Personal expenses

  (663 )  

(548

)

 

(1,083

)

 

(1,049

)

 

(1,017

)

Depreciation and impairment

  (132 )  

(106

)

 

(216

)

 

(225

)

 

(228

)

Items effecting comparability(2)

 

—  

 

 

—  

 

 

—  

 

 

—  

 

 

—  

 

                             

Total expenses

  (1,335 )  

(1,108

)

 

(2,282

)

 

(2,182

)

 

(2,342

)

                             
Participation in earnings of associated companies   24    

29

 

 

46

 

 

15

 

 

9

 

Operating income

  768    

634

 

 

1,250

 

 

927

 

 

436

 

Financial items:

         

Financial income

 

48

 

 

19

 

 

48

 

 

48

 

 

40

 

Financial expenses

  (77 )  

(48

)

 

(101

)

 

(112

)

 

(90

)

                             

Total financial items

  (29 )  

(29

)

 

(53

)

 

(64

)

 

(50

)

Income after financial items

  739    

605

 

 

1,197

 

 

863

 

 

386

 

Tax for the year

  (136 )  

(141

)

 

(240

)

 

(303

)

 

(162

)

                             
Net profit from continuing operations for the period   603    

464

 

 

957

 

 

560

 

 

224

 

                             
Net profit (loss) from discontinuing operations for the period(3)  

(39

)

 

(20

)

 

(46

)

 

(17

)

 

159

 

                             
Net profit from continuing and discontinuing operations for the period   564    

444

 

 

911

 

 

543

 

 

383

 

                             

of which, attributable to shareholders in OMX

  560    

442

 

 

907

 

 

538

 

 

382

 

of which, attributable to minority interests

  4    

2

 

 

4

 

 

5

 

 

1

 

Average number of shares, millions

  120.640    

118.474

 

 

118.671

 

 

118.108

 

 

115.547

 

Number of shares, millions

  120.640    

118.474

 

 

120.640

 

 

118.474

 

 

115.547

 

Average number of shares after dilution, millions   120.640    

118.760

 

 

118.886

 

 

118.394

 

 

115.833

 

Number of shares after dilution, millions

  120.640    

118.760

 

 

120.640

 

 

118.760

 

 

115.833

 

Earnings per share, basic SEK(4)

  4.64    

3.73

 

 

7.64

 

 

4.56

 

 

3.31

 

Earnings per share from continuing operations, basic SEK(4)   4.97    

3.90

 

 

8.03

 

 

4.70

 

 

1.94

 

Earnings per share after dilution, SEK(4)

  4.64    

3.73

 

 

7.64

 

 

4.56

 

 

3.31

 

Earnings per share after dilution from continuing operations, SEK(4)   4.97    

3.90

 

 

8.03

 

 

4.70

 

 

1.94

 

Proposed dividend per share, SEK(5)

 

—  

 

 

—  

 

 

6.50

 

 

6.50

 

 

—  

 

 

 

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Table of Contents
    Year ended
December 31,
 
(Swedish GAAP)   2003(7)(9)     2002(7)  
    (in millions of SEK,
except per share amounts)
 

Results of Operations:

   

Results of Operations from Continuing Operations

   

Revenues:

   

Net sales

 

2,469

 

 

2,557

 

Own work capitalized

 

86

 

 

80

 

Other revenues

 

100

 

 

—  

 

           

Total revenues

 

2,655

 

 

2,637

 

Expenses:

   

Premises expenses

 

(340

)

 

(214

)

Marketing expenses

 

(42

)

 

(53

)

Consultancy expenses

 

(258

)

 

(273

)

Operations and maintenance, IT

 

(343

)

 

(244

)

Other external expenses

 

(233

)

 

(231

)

Personal expenses

 

(1,406

)

 

(1,154

)

Depreciation and impairment

 

(559

)

 

(319

)

Items effecting comparability(2)

 

—  

 

 

(57

)

           

Total expenses

 

(3,181

)

 

(2,545

)

           

Participation in earnings of associated companies

 

21

 

 

38

 

Operating income

 

(505

)

 

130

 

Financial items:

   

Financial income

 

98

 

 

115

 

Financial expenses

 

(128

)

 

(146

)

           

Total financial items

 

(30

)

 

(31

)

Income (loss) after financial items

 

(535

)

 

99

 

Tax for the year

 

54

 

 

(15

)

           
Net profit (loss) from continuing operations for the period  

(481

)

 

84

 

           
Net profit (loss) from discontinuing operations for the period(3)  

50

 

 

(155

)

           
Net loss from continuing and discontinuing operations for the period  

(431

)

 

(71

)

           

of which, attributable to shareholders of OMX

 

(431

)

 

(71

)

of which, attributable to minority interests

 

—  

 

 

—  

 

Average number of shares, millions

 

99.738

 

 

84.041

 

Number of shares, millions

 

115.547

 

 

84.041

 

Average number of shares after dilution, millions

 

100.644

 

 

84.819

 

Number of shares after dilution, millions

 

116.325

 

 

84.819

 

Earnings per share, basic SEK(4)

 

(4.32

)

 

(0.84

)

Earnings per share from continuing operations, basic SEK(4)

 

(4.82

)

 

1.00

 

Earnings per share after dilution, SEK(4)

 

(4.32

)

 

(0.84

)

Earnings per share after dilution from continuing operations, SEK(4)

 

(4.82

)

 

1.00

 

Proposed dividend per share, SEK(5)

 

—  

 

 

—  

 

 

 

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Table of Contents
    June 30,   December 31,
(IFRS)   2007(1)   2006(1)   2005(1)(8)   2004(1)
    (in millions of SEK)

Balance Sheet:

       

Intangible assets

  4,704  

4,350

 

3,832

 

2,385

Tangible fixed assets

  303  

321

 

355

 

366

Financial fixed assets

  729  

720

 

1,094

 

1,228

Short-term receivables

  8,530  

6,139

 

4,026

 

1,264

Financial assets available for sale

  481  

519

 

724

 

705

Cash equivalents

  275  

409

 

519

 

672

Assets held for sale

  69  

70

 

62

 

—  

Total current assets

  9,355  

7,137

 

5,331

 

2,641

Total assets

  15,091  

12,528

 

10,612

 

6,620

Equity attributable to shareholders in parent company   4,540  

4,597

 

4,735

 

3,805

Total shareholders’ equity

  4,562  

4,614

 

4,749

 

3,835

Total long-term liabilities

  1,654  

1,643

 

1,608

 

808

Total short-term liabilities

  8,875  

6,271

 

4,255

 

1,977

 

    December 31,
(Swedish GAAP)   2003(7)(9)   2002(7)
    (in millions of SEK)

Balance Sheet:

   

Intangible assets

 

2,234

 

1,247

Tangible fixed assets

 

465

 

475

Financial fixed assets

 

968

 

852

Short-term receivables

 

1,209

 

1,071

Financial assets available for sale

 

—  

 

—  

Short-term investments

 

1,012

 

993

Cash equivalents

 

350

 

282

Assets held for sale

 

508

 

—  

Total current assets

 

3,079

 

2,346

Total assets

 

6,746

 

4,920

Equity attributable to shareholders in parent company  

3,533

 

2,017

Total shareholders’ equity

 

3,535

 

2,017

Total long-term liabilities

 

827

 

354

Total short-term liabilities

 

2,384

 

2,549

 

 

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Table of Contents
     Six months ended
June 30,
    Year ended
December 31,
 
(U.S. GAAP)(6)      2007         2006         2006         2005    
     (in millions of SEK, except per share data)  

Results of Operations:

        

Revenues

  

1,883

 

 

1,635

 

 

3,318

 

 

2,963

 

Operating expenses

  

(1,294

)

 

(1,143

)

 

(2,294

)

 

(2,259

)

Operating income

  

589

 

 

492

 

 

1,024

 

 

704

 

Net income

   528     382     859     390  

Net income from continuing operations

   567     402     905     407  

Net loss from discontinued operations

   (39 )   (20 )   (46 )   (17 )

Net income per share:

        

Basic

  

4.38

 

 

3.23

 

 

7.24

 

 

3.30

 

Diluted

   4.38     3.22     7.22     3.29  

Net income per share from continuing operations

        

Basic

   4.70     3.40     7.62     3.44  

Diluted

   4.70     3.39     7.61     3.44  

Weighted average shares outstanding (in thousands):

        

Basic

  

120,640

 

 

118,474

 

 

118,671

 

 

118,108

 

Diluted

   120,640     118,760     118,886     118,394  

Dividends declared per share:

        

Krona

  

—  

 

 

—  

 

 

6.50

 

 

6.50

 

US$

  

—  

 

 

—  

 

 

0.95

 

 

0.82

 

 

     June 30,    December 31,
(U.S. GAAP)(6)    2007    2006    2005
     (in millions of SEK)

Balance Sheet:

        

Property and equipment

   303    321    355

Intangible assets

   4,504    4,213    3,775

Short-term financial investments / cash and cash equivalents

   756    928    1,243

Total assets

   14,826    12,345    10,480

Current financial liabilities

   598    398    498

Non-current financial liabilities

   1,359    1,360    1,409

Total liabilities

   10,704    8,120    6,097

Shareholders equity

  

4,122

  

4,225

  

4,383


(1)

Effective January 1, 2005, OMX reports in accordance with IFRS. Restatement of comparison figures was made for 2004 in respect of all standards, except for IAS 39 (Financial instruments), which was applied for the first time in 2005. Furthermore, from January 1, 2006, OMX applies hedge accounting of hedging of internally forecasted flows in foreign currency. Income from cash-flow hedges are reported in shareholders’ equity.

 

(2)

Items affecting comparability amounted to SEK (57) million, which related to expenses incurred, as a result of a group-wide cost-reduction program.

 

(3)

The years 2002 to 2006 have been reclassified for comparison purposes due to the disclosure of discontinued operations, relating to OMX’s UK sales operations in securities administration services.

 

(4)

Earnings per share are calculated on the basis of the weighted average number of shares during the year. The amount is based on OMX’s shareholders’ portion of net profit/loss for the period including or excluding discontinuing operations.

 

(5)

Dividends are set forth in the above table under the year to which they relate. In accordance with general practice in Sweden, the dividends are declared and paid in the year following the financial period.

 

(6)

For further details, see Note 36 in OMX’s audited financial statements. For the periods ending June 30, 2006 and 2007 see Note 8 in OMX’s unaudited interim consolidated financial statements.

 

(7)

The reported figures have been prepared in accordance with Swedish GAAP. Swedish GAAP differs in certain material respects from IFRS and U.S. GAAP.

 

(8)

Copenhagen Stock Exchange was consolidated in OMX from January 1, 2005.

 

(9)

HEX (Finnish exchange organization) was consolidated in OMX from July 1, 2003.

 

 

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EXCHANGE RATE INFORMATION

The following tables show, for the periods indicated, information concerning the exchange rate between the Swedish Krona and the U.S. dollar. The average rates for the monthly periods presented in these tables were calculated by taking the simple average of the daily Euro foreign exchange reference rates at 2:15 p.m. CET, as published by the European Central Bank. The average rates for the interim periods and annual periods presented in these tables were calculated by taking the simple average of the daily Euro foreign exchange reference rates at 2:15 p.m. CET during the relevant period. This information is provided solely for your information, and neither Nasdaq nor OMX represents that Swedish Kronor could be converted into U.S. dollars at these rates or at any other rate. These rates are not the rates used by OMX in the preparation of its consolidated financial statements included in this Proxy Statement/Prospectus. On May 23, 2007, the last full trading day for OMX Shares prior to the announcement of the Offer, the exchange rate was SEK 6.83 to $1.00. On [·], 2007, the last practicable day before the date of this Proxy Statement/Prospectus, the exchange rate was SEK [·] to $1.00.

 

Recent Monthly Data    Period-end
Rate(1)
   Average
Rate(2)
   High    Low

July 2007

   6.7046    6.6965    6.8189    6.6324

June 2007

   6.8512    6.9526    7.0864    6.8512

May 2007

   6.9089    6.8138    6.9273    6.7151

April 2007

   6.7272    6.8349    7.0094    6.7020

March 2007

   7.0177    7.0228    7.1320    6.9512

February 2007

   7.0216    7.0287    7.1078    6.9428

January 2007

   6.9878    6.9855    7.0670    6.8007

December 2006

   6.8644    6.8403    6.9154    6.7871

November 2006

   6.8683    7.0663    7.2131    6.8683

October 2006

   7.2558    7.3377    7.4013    7.2402

September 2006

   7.3299    7.2808    7.3307    7.2232

Interim Period Data

           

Three months ended June 30, 2007

   6.8512    6.8673    7.0864    6.7020

Three months ended June 30, 2006

   7.2670    7.3924    7.8086    7.0916

Six months ended June 30, 2007

   6.8512    6.9407    7.1320    6.7020

Six months ended June 30, 2006

   7.2670    7.5907    7.9683    7.0916

Annual Data

           

(Year ended December 31,)

           

2006

   6.8644    7.3793    7.9683    6.7871

2005

   7.9584    7.4780    8.2562    6.6453

2004

   6.6226    7.3453    7.7688    6.5921

2003

   7.1892    8.0838    8.7625    7.1892

2002

   8.7278    9.7194    10.7572    8.7278

(1)

The period-end rate is derived from the Euro foreign exchange reference rates at 2:15 p.m. CET on the last business day of the applicable period.

 

(2)

The average rates for the monthly, interim, and annual periods were calculated by taking the simple average of the daily Euro foreign exchange reference rates at 2:15 p.m. CET of each business day in the period, as published by the European Central Bank.

 

 

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Table of Contents

SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA OF THE COMBINED COMPANY

The following table sets forth selected information about the pro forma financial condition and results of operations, including per share data, of The NASDAQ OMX Group after giving effect to the completion of the Offer. The table sets forth selected unaudited pro forma condensed combined statements of income for the six months ended June 30, 2007 and the fiscal year ended December 31, 2006, as if the Offer had been completed on January 1, 2006, and the selected unaudited pro forma condensed combined balance sheet data as of June 30, 2007, as if the Offer had been completed on that date. The information presented below was derived from the consolidated historical financial statements of Nasdaq and OMX, and should be read in conjunction with these financial statements and the notes thereto, included or incorporated by reference elsewhere in this Proxy Statement/Prospectus and the other unaudited pro forma financial data, including related notes, included elsewhere in this Proxy Statement/Prospectus.

The unaudited pro forma financial data is based on estimates and assumptions that are preliminary and does not purport to represent the financial position or results of operations that would actually have occurred had the Offer been completed as of the dates or at the beginning of the periods presented or what the combined company’s results will be for any future date or any future period. See also “Forward-Looking Statements” and “Risk Factors.” For purposes of the pro forma condensed combined financial information, OMX financial information has been translated from Swedish Kronor into U.S. Dollars and is presented in accordance with U.S. GAAP. The pro forma condensed combined financial information is unaudited and is presented for informational purposes only.

 

     Year Ended
December 31,
2006
   Six Months Ended
June 30, 2007
     (in thousands, except per share
amounts)

Total revenues

  

$

2,142,914

   $ 1,390,967

Income from continuing operations

  

$

180,336

   $ 116,389

Basic earnings per share from continuing operations

  

$

1.09

   $ 0.67

Diluted earnings per share from continuing operations

  

$

0.93

   $ 0.57
          As of June 30,
2007
          (in thousands)

Total assets

   $ 9,753,762

Total liabilities

   $ 6,147,579

Stockholders’ equity

   $ 3,602,972

 

 

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Table of Contents

COMPARATIVE HISTORICAL AND PRO FORMA PER SHARE DATA

The following table presents audited basic and diluted income per share data for the year ended December 31, 2006, unaudited basic and diluted income per share data for the six months ended June 30, 2007 and unaudited cash dividends and net book value per share data for the year ended December 31, 2006 and the six months ended June 30, 2007 for each of Nasdaq and OMX on a historical basis, unaudited basic and diluted per share data for the year ended December 31, 2006 and the six months ended June 30, 2007 and unaudited cash dividends and net book value per share data for the combined company on a pro forma basis for the six months ended June 30, 2007. The per share data for the combined company on a pro forma basis presented below is not necessarily indicative of the financial position of the combined company had the Offer been completed on June 30, 2007 and the operating results that would have been achieved by the combined company had the Offer been completed as of the beginning of the period presented, and should not be construed as representative of future financial position or operating results. The per share data for the combined company on a pro forma basis presented below has been derived from the Unaudited Pro Forma Condensed Combined Financial Data of the Combined Company included in this Proxy Statement/Prospectus. The balance sheet of OMX as of June 30, 2007 has been translated using a SEK/USD exchange rate of 6.8512 to 1. The statement of income of OMX for the year ended December 31, 2006 and the six months ended June 30, 2007 have been translated using an average SEK/USD exchange rate of 6.8403 to 1 and 6.9526 to 1, respectively.

This information is only a summary and should be read in conjunction with the selected historical financial data of Nasdaq and OMX, the Nasdaq and OMX Unaudited Pro Forma Condensed Combined Financial Data of the Combined Company, and the separate historical financial statements of Nasdaq and OMX and related notes included in, or incorporated by reference into, this Proxy Statement/Prospectus.

Nasdaq Historical

 

(U.S. GAAP)    Year Ended December 31, 2006    Six Months Ended June 30, 2007

Basic income per share

   $1.22   

$0.66

Diluted income per share

   $0.95   

$0.52

Cash dividends per share

   —      —  

Net book value per share

   $12.98    $14.20

OMX Historical

 

(IFRS)    Year Ended December 31, 2006    Six Months Ended June 30, 2007

Basic income per share from continuing operations

  

$1.17

  

$0.71

Diluted income per share from continuing operations

  

$1.17

  

$0.71

Cash dividends per share

  

$0.95

  

—  

Net book value per share

  

$5.59

  

$5.44

Combined Company Pro Forma

 

(U.S. GAAP)    Year Ended December 31, 2006    Six Months Ended June 30, 2007

Basic income per share

   $1.09   

$0.67

Diluted income per share

   $0.93   

$0.57

Cash dividends per share

   —     

—  

Net book value per share

      $20.76

 

 

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Table of Contents

MARKET PRICE AND DIVIDEND INFORMATION

Nasdaq Common Stock is listed on the Nasdaq Global Select Market under the symbol “NDAQ.” OMX’s shares are listed on the Nordic Exchange in Stockholm, Sweden, Helsinki, Finland, Copenhagen, Denmark and Iceland under the symbol “OMX.” Prior to 2004, the Symbol for OMX was OM. From July 1, 2002 to February 9, 2005 Nasdaq was quoted on the OTCBB under the symbol “NDAQ.” As of June 30, 2007, there were approximately 1,565 holders of record of Nasdaq Common Stock and approximately 10,922 holders of record of OMX Shares. The table below sets forth, for the calendar quarters indicated, the high and low sales prices per share of Nasdaq Common Stock and OMX Shares, as reported on the Nasdaq Global Select Market, the OTCBB or the OMX Nordic Exchange Stockholm AB, as applicable.

 

     OMX Shares (SEK)    Nasdaq Common Stock ($)

Calendar Quarter

     High        Low        High        Low  

2002

           

First Quarter

   151.50    107.50    NA    NA

Second Quarter

   126.00    55.50    NA    NA

Third Quarter

   71.00    31.50    13.75    9.05

Fourth Quarter

   66.50    24.00    11.20    6.25

2003

           

First Quarter

   49.80    32.10    10.40    6.75

Second Quarter

   59.00    35.30    8.55    5.15

Third Quarter

   89.50    58.50    10.05    6.75

Fourth Quarter

   89.50    74.00    9.35    8.05

2004

           

First Quarter

   120.50    88.50    12.60    8.55

Second Quarter

   118.50    84.00    8.80    6.30

Third Quarter

   92.00    76.00    7.00    5.53

Fourth Quarter

   91.50    80.50    10.50    6.40

2005

           

First Quarter

   87.25    77.50    11.86    7.60

Second Quarter

   91.25    78.50    20.00    9.81

Third Quarter

   102.00    88.25    25.75    18.80

Fourth Quarter

   110.50    92.00    45.23    25.33

2006

           

First Quarter

   155.00    108.00    46.75    34.83

Second Quarter

   167.00    109.50    45.00    23.91

Third Quarter

   143.75    104.00    32.49    25.33

Fourth Quarter

   143.50    123.25    42.37    28.90

2007

           

First Quarter

   147.00    123.75    37.45    26.57

Second Quarter

   230.50    144.50    34.96    29.05

Third Quarter (through August 5, 2007)

  

222.50

  

199.00

   34.10   

29.37

The following table shows, as of May 23, 2007, the last full trading day before the announcement of the Offer, and [·], 2007, the last practicable day before the date of this Proxy Statement/Prospectus, the closing price per share of Nasdaq Common Stock on the Nasdaq Global Select Market and the closing price per OMX Share on the OMX Nordic Exchange Stockholm AB. This table also includes the implied equivalent price per OMX Share on those dates. This implied equivalent per share price reflects the value of 0.502 shares of Nasdaq Common Stock and SEK 94.3 that OMX shareholders will receive for each OMX Share that is exchanged for the Basic Alternative using the closing sale price of Nasdaq Common Stock on those dates. The table assumes an exchange rate of SEK 6.83 to $1.00 on May 23, 2007 and SEK [·] to $1.00 on [·], 2007.

 

    

Nasdaq

Common Stock

     OMX Shares      Implied Equivalent Value
of OMX Share
 

May 23, 2007

   $ 33.19      SEK 174.5      SEK 208.1  

[·], 2007

   $ [ ·]    SEK [ ·]    SEK [ ·]

 

 

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The market price of Nasdaq Common Stock or OMX Shares could change significantly. Because the consideration to be paid in the Offer will not be adjusted for changes in the market price of Nasdaq Common Stock or OMX Shares, the consideration that holders of OMX Shares may receive in the Offer may vary significantly from the market value of the Nasdaq Common Stock that holders of OMX Shares would have received if the Offer was completed on May 23, 2007, the last full trading day before the announcement of the Offer, or on the date of this Proxy Statement/Prospectus.

Dividend Policy

To date, Nasdaq has not paid cash dividends on Nasdaq Common Stock and does not intend to pay any cash dividends in the foreseeable future.

For 2006, OMX paid a dividend in the total amount of SEK 6.50 per OMX Share. OMX’s current dividend policy is that the ordinary dividend will, in the future, grow in pace with OMX’s earnings per share, taking OMX’s long term capital requirements into account.

Following completion of the Offer, the holders of Nasdaq Common Stock would be entitled to receive any dividends as may be declared by the combined company’s board of directors from funds legally available therefor. The dividend policy of the combined company will be determined by the board of directors of the combined company.

 

 

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Table of Contents

FORWARD-LOOKING STATEMENTS

The S.E.C. encourages companies to disclose forward-looking information so that investors can better understand a company’s future prospects and make informed investment decisions. These forward-looking statements include all matters that are not historical facts. This Proxy Statement/Prospectus and documents incorporated by reference contain these types of statements. Words such as “anticipates,” “estimates,” “expects,” “projects,” “intends,” “plans,” “believes,” “may,” “will” or “should” and words or terms of similar substance used in connection with any discussion of future operating results or financial performance identify forward-looking statements.

These forward-looking statements involve certain known and unknown risks and uncertainties. Factors that could cause actual results to differ materially from those contemplated by the forward-looking statements include, but are not limited to, the following factors:

 

   

our operating results, which may be lower than expected;

 

   

our ability to implement our strategic initiatives and any consequences from our pursuit of our corporate strategy, including the Offer;

 

   

competition, economic, political and market conditions and fluctuations, including interest rate risk;

 

   

government and industry regulation; or

 

   

adverse changes that may occur in the securities markets generally.

See also “Risk Factors” beginning on page 21 and the risk factors disclosed in Nasdaq’s Annual Report on Form 10-K for the fiscal year ended December 31, 2006. These risks and uncertainties are not exhaustive. Other sections of this Proxy Statement/Prospectus describe additional factors that could adversely impact the combined company’s business and financial performance. Moreover, the combined company will operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible to predict all risks and uncertainties, nor can we assess the impact that these factors will have on the combined company’s business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statement.

Most of these factors are difficult to predict accurately and are generally beyond our control. You should consider the uncertainty and any risk resulting from such uncertainty in connection with any forward-looking statement that may be made herein. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Proxy Statement/Prospectus in the case of forward-looking statements contained in this Proxy Statement/Prospectus, or the dates of the documents incorporated by reference into this Proxy Statement/Prospectus in the case of forward-looking statements made in those incorporated documents. Readers should carefully review this Proxy Statement/Prospectus in its entirety, including, but not limited to, our “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the financial statements and the accompanying notes thereto, both of which are included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2006 and incorporated by reference herein, and the risks described in “Risk Factors,” in this Proxy Statement/Prospectus. Readers should also review OMX’s “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the financial statements and the accompanying notes thereto in this Proxy Statement/Prospectus. Except for our ongoing obligations to disclose material information under U.S. federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events.

Nasdaq expressly qualifies in their entirety all forward-looking statements attributable to Nasdaq, OMX or the combined company, or any person acting on their behalf, by the cautionary statements contained or referred to in this section.

 

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Table of Contents

RISK FACTORS

In deciding how to vote your Nasdaq Voting Securities on the matters described in this Proxy Statement/Prospectus or whether to tender your OMX Shares in the Offer, you should carefully consider the risks set forth below in addition to the other information contained in this Proxy Statement/Prospectus.

Risks Related to the Offer

We may not be able to successfully combine the Nasdaq and OMX businesses.

Rationalizing and coordinating the operations of Nasdaq and OMX will involve complex technological, operational and personnel-related challenges. This process will be time-consuming and expensive and may disrupt the business of the combined company. The difficulties, costs and delays that could be encountered may include:

 

   

unforeseen difficulties, costs or complications in combining the companies’ operations, which could lead to the combined company not achieving the synergies we anticipate;

 

   

unanticipated incompatibility of systems and operating methods;

 

   

inability to use capital assets efficiently to develop the business of the combined company;

 

   

the difficulty of complying with government-imposed regulations in both the United States and Europe, which may be different from each other;

 

   

resolving possible inconsistencies in standards, controls, procedures and policies, business cultures and compensation structures between Nasdaq and OMX;

 

   

the diversion of management’s attention from ongoing business concerns and other strategic opportunities;

 

   

the integration of Nasdaq’s and OMX’s respective businesses, operations and workforces;

 

   

the retention of key employees and the management of OMX and Nasdaq;

 

   

the implementation of disclosure controls, internal controls and financial reporting systems at OMX to comply with the requirements of U.S. GAAP and U.S. securities laws and regulations required as a result of the combined company’s status as a reporting company under the Exchange Act;

 

   

the coordination of geographically separate organizations;

 

   

the coordination and consolidation of ongoing and future research and development efforts;

 

   

possible tax costs or inefficiencies associated with integrating the operations of the combined company;

 

   

possible modification of OMX’s operating control standards in order for the combined company to comply with the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated thereunder, which is required as a result of the combined company’s status as a reporting company under the Exchange Act;

 

   

the retention and recruitment of employees to support existing and new aspects of the combined company’s business and new technology development;

 

   

the pre-tax restructuring and revenue investment costs, which are estimated at $150 million to be incurred in the two years following completion of the Offer;

 

   

the retention of strategic partners and attracting new strategic partners;

 

   

negative impacts on employee morale and performance as a result of job changes and reassignments; and

 

   

regulatory issues, including with respect to the regulatory approvals necessary to complete the Offer.

 

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Table of Contents

For these reasons, the combined company may not achieve the anticipated financial and strategic benefits, including cost savings from operational efficiencies and synergies, from the combination of the businesses of Nasdaq and OMX, and any actual cost savings and synergies may be lower than we currently expect and may take a longer time to achieve than we currently anticipate, and we may fail to realize any of the anticipated benefits of the combination of the two companies.

The benefits of the combination of Nasdaq and OMX may not be achieved if we cannot effect the compulsory acquisition of all of the issued and outstanding OMX Shares.

Under Swedish law, to effect the compulsory acquisition of OMX Shares for which valid acceptances have not been received under the Offer, we are required to have acquired more than 90% of the outstanding OMX Shares. The Offer is subject to a condition that the Offer is accepted to such an extent that Nasdaq becomes the owner of shares representing more than 90% of the outstanding OMX Shares on a fully diluted basis. We may waive the 90% condition without the consent of OMX if, when the condition is waived, the Offer is accepted to such an extent that Nasdaq becomes the owner of OMX Shares representing at least 67% of the outstanding OMX Shares on a fully diluted basis. We may waive the 90% condition only with the consent of OMX if, when the condition is waived, the Offer is accepted to such an extent that Nasdaq becomes the owner of OMX Shares representing less than 67% of the outstanding OMX Shares on a fully diluted basis. As a result, it is possible that, at the end of the Offer period, we will not have acquired a sufficient number of OMX Shares under the Offer to effect a compulsory acquisition of the remaining outstanding OMX Shares. This will prevent or delay us from realizing the anticipated benefits (including synergies) from the integration of our operations with OMX’s operations.

We will need to invest in our operations to integrate OMX and prior transactions and to maintain and grow our business, and we may need additional funds to do so.

We depend on the availability of adequate capital to maintain and develop our business. We believe that we can meet our current capital requirements from internally generated funds, cash in hand and available borrowings. If the combined company is unable to fund its capital requirements as currently planned, however, it would have a material adverse effect on the combined company’s business, financial condition and operating results.

In addition to our debt service obligations, we will need to continue to invest in our operations through 2010 to integrate OMX. If the combined company does not achieve the expected operating results, we will need to reallocate our cash resources. This may include borrowing additional funds to service debt payments, which may impair our ability to make investments in our business or to integrate OMX.

Should the combined company need to raise funds through incurring additional debt, the combined company may become subject to covenants even more restrictive than those contained in our current debt instruments. Furthermore, if we issue additional equity, our equity holders will suffer dilution. Thus, there can be no assurance that additional capital will be available on a timely basis, on favorable terms or at all.

Regulatory authorities may delay or impose conditions on approval of the Offer, which may diminish the anticipated benefits of the completion of the Offer.

The completion of the Offer requires the receipt of certain approvals from public authorities or other regulatory bodies. Failure to obtain these approvals in a timely manner may delay the completion of the Offer, possibly for a significant period of time. In addition, regulatory authorities may attempt to condition their approval of the Offer on the imposition of conditions that may have a material adverse effect on the combined company’s operating results or the value of Nasdaq Common Stock after the Offer is completed. Any delay in the completion of the Offer may diminish anticipated benefits or may result in additional transaction costs, loss of revenue or other effects associated with uncertainty about the completion of the Offer.

 

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Factors affecting the trading price of Nasdaq Common Stock may differ from the factors affecting the price of OMX Shares.

Upon completion of the Offer, holders of OMX Shares that receive Nasdaq Common Stock as consideration of the Offer will become holders of Nasdaq Common Stock. The combined company’s business differs from that of OMX, and the combined company’s results of operations, as well as the trading price of Nasdaq Common Stock, may be affected by factors different from those affecting OMX’s results of operations and the price of OMX Shares.

Charges to earnings resulting from acquisition, restructuring and integration costs may materially adversely affect the market value of Nasdaq Common Stock following the completion of the Offer.

In accordance with U.S. GAAP, the combined company will account for the completion of the Offer using the purchase method of accounting. The combined company will allocate the total estimated purchase price to OMX’s net tangible assets, amortizable intangible assets and non-amortized intangibles, and based on their fair values as of the date of completion of the Offer, record the excess of the purchase price over those fair values as goodwill. The combined company’s financial results, including earnings per share, could be adversely affected by a number of financial adjustments required by U.S. GAAP including the following:

 

   

the combined company will incur additional amortization expense over the estimated useful lives of certain of the intangible assets acquired in connection with the Offer during such estimated useful lives;

 

   

the combined company may have additional depreciation expense as a result of recording purchased tangible assets at fair value, in accordance with U.S. GAAP, as compared to book value as recorded by OMX;

 

   

to the extent the value of goodwill or intangible assets with indefinite lives becomes impaired, the combined company may be required to incur material charges relating to the impairment of those assets; and

 

   

the combined company will incur certain adjustments to reflect OMX’s financial condition and operating results under U.S. GAAP and U.S. dollars.

We expect to incur costs associated with the Offer, including financial advisors’ fees and legal and accounting fees. In addition, we expect to incur costs associated with realizing synergies from the Offer. These costs may be substantial and may include those related to the severance and stock option acceleration provisions of employee benefit plans, which could be triggered by the completion of the Offer as well as other exit costs. We face potential costs related to employee retention and deployment of physical capital and other integration costs. We have not yet determined the amount of these costs. We expect to account for costs directly related to the Offer, including financial advisors’ costs, legal and accounting fees, and certain exit costs associated with OMX’s operations as purchase related adjustments when the Offer is completed, as proscribed under U.S. GAAP. These items will reduce cash balances for the periods in which those costs are paid. Other costs that are not directly related to the Offer, including retention and integration costs, will be recorded as incurred and will negatively impact earnings, which could have a material adverse effect on the price of Nasdaq Common Stock.

In addition, from the date of the completion of the Offer, the combined company’s results of operations will include OMX’s operating results, presented in accordance with U.S. GAAP. OMX’s historical consolidated financial statements for 2004 through 2007 have been prepared in accordance with IFRS, which differ in certain material respects from U.S. GAAP. For instance, U.S. GAAP will require OMX to recognize revenue under certain of its technology contracts over the term of the contract rather than at the beginning of the contract. Accordingly, the U.S. GAAP presentation of OMX’s results of operations may not be comparable to its historical financial statements.

 

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The combined company’s indebtedness following completion of the Offer will limit financial flexibility.

Our indebtedness as of June 30, 2007 was approximately $1.5 billion. After giving effect to the Offer (as described in “The Offer—Financing of the Offer”) the combined company’s pro forma indebtedness as of June 30, 2007 is approximately $3.4 billion. The combined company’s leverage after completion of the Offer will be higher than Nasdaq’s and OMX’s combined existing indebtedness. As a result of the increase in debt, demands on the cash resources of the combined company will increase after completion of the Offer, which could have important effects on an investment in Nasdaq Common Stock, including reducing funds available to the combined company for its operations and general corporate purposes or for capital expenditures as a result of the dedication of a substantial portion of the combined company’s consolidated cash flow from operations to the payment of principal and interest on the combined company’s indebtedness; increasing the combined company’s vulnerability to a downturn in general economic conditions; placing the combined company at a competitive disadvantage compared with its competitors with less debt; and affecting the combined company’s ability to obtain additional financing in the future for refinancing indebtedness, acquisitions, working capital, capital expenditures or other purposes.

The anticipated incurrence of this debt resulted in the downgrading of our credit rating outlook by Moody’s after the announcement of the Offer in May 2007. An increase in debt relating to the Offer may result in additional credit rating downgrades.

OMX shareholders receiving Nasdaq Common Stock in the Offer will become shareholders in a Delaware corporation, which will change the rights and privileges of such shareholders in comparison to the rights and privileges of a shareholder in a Swedish company.

We are governed by the laws of the United States and the State of Delaware and by our Restated Certificate of Incorporation and By-Laws. The Delaware General Corporation Law extends to shareholders certain rights and privileges that may not exist under Swedish law and, conversely, does not extend certain rights and privileges that an OMX shareholder may have as a shareholder of a company governed by Swedish law. We have adopted certain provisions that have the effect of discouraging a third party from acquiring control of us. For example, under our Restated Certificate of Incorporation any shareholder who beneficially owns, directly or indirectly, more than 5% of the then outstanding stock that is generally entitled to vote may not vote those shares in excess of 5%. Such provisions could limit the price that some investors might be willing to pay in the future for shares of Nasdaq Common Stock. These provisions may also have the effect of discouraging or preventing certain types of transactions involving an actual or a threatened change in control of us, including unsolicited takeover attempts, even though such a transaction may offer our shareholders the opportunity to sell their Nasdaq Common Stock at a price above the prevailing market price.

The market price of Nasdaq Common Stock may decline as a result of the completion of the Offer.

The market price of Nasdaq Common Stock may decline as a result of the completion of the Offer if:

 

   

the combination of Nasdaq’s and OMX’s businesses is unsuccessful;

 

   

we do not achieve the expected benefits of the combination with OMX as rapidly or to the extent anticipated by financial analysts or investors; or

 

   

the effect of the Offer on our financial results is not consistent with the expectations of financial analysts or investors.

Nasdaq shareholders and OMX shareholders will have a reduced ownership and voting interest after the completion of the Offer and will exercise less influence over management.

After the completion of the Offer, Nasdaq shareholders and OMX shareholders will own a smaller percentage of the combined company than they currently own of Nasdaq and OMX, respectively. Upon

 

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completion of the Offer, and assuming that all of the outstanding OMX Shares are validly tendered in the Offer and not withdrawn, former Nasdaq shareholders and former OMX shareholders will own approximately 72% and 28%, respectively, of the outstanding Nasdaq Common Stock of the combined company immediately after the completion of the Offer calculated on a fully diluted basis using the treasury method. Consequently, Nasdaq shareholders, as a group, will have reduced ownership and voting power in the combined company compared to their current ownership and voting power in Nasdaq, and OMX shareholders, as a group, will have reduced ownership and voting power in the combined company compared to their current ownership and voting power in OMX.

The consideration to be paid in the Offer to OMX shareholders who accept the Offer and receive cash is based on a fixed amount of Swedish Kronor and, therefore, we are subject to currency fluctuations until the payment date.

Because any cash paid to holders of OMX Shares in connection with the Offer will be paid in Swedish Kronor, we may have to buy Swedish Kronor with U.S. dollars at the prevailing exchange rate on the payment date. As a result, the actual amount of U.S. dollars required to buy a sufficient amount of Swedish Kronor to pay the cash portion of the consideration to such holders will depend upon the exchange rate prevailing on the business day on which the funds are made available by us to the receiving agent.

If the Offer is completed, but some OMX Shares remain outstanding, the liquidity and market value of these OMX Shares held by the public could be adversely affected by the fact that they will be held by a small number of holders.

In the event that not all of OMX’s Shares are acquired pursuant to the Offer, the number of OMX shareholders and the number of OMX Shares held by individual holders will be greatly reduced. As a result, the closing of the Offer will adversely affect the liquidity and may adversely affect the market value of the remaining OMX Shares held by the public.

If the Offer is completed but some OMX Shares remain outstanding, holders of OMX Shares who do not tender their OMX Shares in the Offer will be investors in a company that will have a controlling shareholder, Nasdaq. If this occurs, Nasdaq’s ownership of OMX Shares will allow Nasdaq to determine or significantly influence any vote requiring a majority or supermajority of OMX’s outstanding shares, such as a vote to elect members of OMX’s Board of Directors, make certain amendments to OMX’s Articles of Association or approve a proposed business combination. In addition, the combined company may not be able to fully realize the synergies it expects if Nasdaq is unable to acquire all of the outstanding OMX Shares.

OMX Shares are currently listed on the OMX Nordic Exchange Stockholm AB, the OMX Nordic Exchange Copenhagen A/S, the OMX Nordic Exchange Helsinki Ltd. and the OMX Nordic Exchange Iceland. Depending upon the number of OMX Shares tendered in the Offer, following the successful completion of the Offer, OMX Shares may no longer meet the requirements for continued listing on such exchanges. Moreover, to the extent permitted under applicable law and stock exchange regulations, the combined company intends to request the delisting of OMX Shares.

If OMX Shares are delisted from the OMX Nordic Exchange Stockholm AB, the OMX Nordic Exchange Copenhagen A/S, the OMX Nordic Exchange Helsinki Ltd. or the OMX Nordic Exchange Iceland but the compulsory acquisition proceedings have not yet been (or are never able to be) completed and certain OMX Shares remain outstanding, the market for OMX Shares could be adversely affected. Although it is possible that OMX Shares would be traded in over-the-counter, which we refer to as OTC, markets prior to the compulsory acquisition proceedings, this alternative trading may not occur. In addition, the extent of the public market for OMX Shares and the availability of market quotations would depend upon the number of holders and/or the aggregate market value of OMX Shares remaining at such time, as well as the interest in maintaining a market in OMX Shares on the part of securities firms. If OMX Shares are delisted, OMX could also cease making

 

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disclosures and reports required for listed or publicly-traded companies, which could further impact the value of the OMX Shares. To the extent the availability of such continued listings or quotations depends on steps taken by OMX or the combined company, OMX or the combined company may or may not take such steps. Therefore, you should not rely on any OTC listing, quotation or trading being available.

Risks Relating to the Combined Company’s Business

The securities market business is highly competitive.

Nasdaq and OMX face, and the combined company will face, competition from numerous entities in the securities market industry, including competition for trading services, listings, and financial products from other exchanges and market centers. This competition includes both product and price competition and could increase as a result of the registration of new exchanges and market centers in the United States and Europe.

In addition, the liberalization and globalization of world markets have resulted in greater mobility of capital, greater international participation in local markets and more competition. Both in the U.S. and in other countries, the competition among exchanges and other execution venues has become more intense.

In the last several years, the structure of the securities industry has changed significantly through demutualizations and consolidations. In response to growing competition, many marketplaces in both Europe and the United States have demutualized to provide greater flexibility for future growth. The securities industry is also experiencing consolidation, creating a more intense competitive environment. In addition, a high proportion of business in the securities market is becoming increasingly concentrated in a smaller number of institutions and the combined company’s revenue may therefore become concentrated in a smaller number of customers.

Examples of these new competitive forces include:

 

   

since the fall of 2006, eight investment banks have announced that they intend to set up a multilateral trading facility in Europe, also known as Project Turquoise;

 

   

since the fall of 2006, 14 investment banks have announced that they intend to set up a multilateral trade reporting facility in Europe, also known as Project Boat;

 

   

alternative trading platforms such as Equiduct, Chi-X and Plus Markets;

 

   

alternative trade reporting platforms such as Reuters Trade Publication;

 

   

the proposed combination of Deutsche Börse AG and International Securities Exchange Holdings, Inc.;

 

   

electronic trading systems specializing in large volume trades, such as LiquidNet, Pipeline Trading and Investment Technology Group’s POSIT platform;

 

   

the creation of NYSE Euronext, Inc. in April 2007 (see discussion below);

 

   

the Boston Stock Exchange, Inc., the Chicago Stock Exchange, Inc., the Philadelphia Stock Exchange, Inc, the National Stock Exchange, the International Securities Exchange LLC, and the Chicago Board Options Exchange all have investment agreements with other participants in the securities industry;

 

   

new ECNs operating in the U.S. cash equities trading market, such as Direct Edge, Lava Flow and BATS; and

 

   

the International Securities Exchange’s and the Chicago Board Options Exchange’s launch of cash equities exchanges in September 2006 and March 2007, respectively;

If these or other trading venues are successful, the combined company’s business, financial condition and operating results could be adversely affected.

 

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Because of these market trends, we face intense competition. Competitors may develop market trading platforms that are more competitive than ours. If we are unable to compete successfully in this environment, our business, financial condition and operating results will be adversely affected.

Price competition has affected and could continue to affect the business of Nasdaq and OMX.

The securities trading industry in the United States is characterized by intense price competition. We have in the past lowered prices and increased rebates for trade executions to attempt to gain or maintain market share. These strategies have not always been successful and have at times hurt operating performance. Additionally, we have also been, and may once again be, required to adjust pricing to respond to actions by competitors, which adversely impacts operating results. We have recently taken steps to unify pricing for trading of securities listed on different exchanges. This rationalization of our pricing may adversely affect our market share. OMX is subject to potential price competition from new competitors and potentially from new and existing regulated markets and multilateral trading facilities.

The securities trading industry also competes with respect to the pricing of market data. In addition, we are subject to price competition with respect to proprietary products for pre-trade book data and for post-trade last sale data. In the future our competitors may offer market data rebates for quotes and trades on their systems. The success of competitors for trade executions, pressure from users for lower data fees and regulatory changes could also affect OMX’s market data business.

Our trade reporting facility (which we operate jointly with the Financial Industry Regulatory Authority, which we refer to as FINRA and which was formerly known as the National Association of Securities Dealers or the NASD, for the purpose of accepting reports of off-exchange trades) faces competition from the trade reporting facilities operated jointly with FINRA by the National Stock Exchange, the Boston Stock Exchange and the NYSE. Our trade reporting facility also faces competition from FINRA’s alternative display facility. Our competitors’ market data rebate programs for trade reporting could lead to a loss of market share and decreased revenues.

The NYSE’s recent mergers and acquisitions activity has created a strong competitor in our industry that has a similar strategy to that of the combined company.

The combination of the NYSE and Euronext creates strong competition for the combined company. The combination makes NYSE Euronext more competitive in attracting new listings. NYSE Euronext is also enhancing its electronic trading capabilities, which compete directly with ours and may result in NYSE Euronext’s trading volume increasing to our detriment. If NYSE Euronext succeeds in attracting disproportionately more trading volume or additional listings, this may have a negative impact on the combined company’s business, financial condition and operating results.

We face significant competition in our securities trading business, which could reduce Nasdaq’s and OMX’s transactions, trade reporting and market information revenues and negatively impact our financial results.

We compete for trading of Nasdaq-, NYSE- and Amex-listed securities and OMX competes for trading of securities listed on the Nordic Exchange and the Baltic Market. Any decision by market participants to quote, execute or report their trades in the U.S. through other exchanges, ECNs or the Alternative Display Facility maintained by NASD, could have a negative impact on our share of quotes and trades in securities traded through The Nasdaq Market Center. Any decision by market participants to quote, execute or report their trades in Northern Europe through another regulated market or multilateral trading facility could have a negative impact on OMX’s share of quotes and trades in securities traded through the Nordic Exchange.

Although we trade a large percentage of securities of NASDAQ-listed companies, we face strong competition from other exchanges and emerging players in the market. For non- NASDAQ -listed securities, the other national exchanges collectively offer greater liquidity than we do. Accordingly, we face greater obstacles in

 

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trying to attract trading volume in non- NASDAQ-listed securities. OMX has had a history of trading a greater percentage of the securities of several of the largest OMX-listed companies than its nearest competitors although it does face trade execution competition from other European and U.S. markets.

Our responses to competition may not be sufficient to regain lost business or prevent other market participants from shifting some of their quoting and/or trade reporting to other industry participants. We may need to reduce prices to remain competitive.

Nasdaq and OMX must adapt to significant competition in their listing businesses.

Nasdaq and OMX must adapt to significant competition in their respective listing businesses from other exchanges. Historically, the NYSE has been our largest competitor, and we have competed with the NYSE primarily for listings of larger domestic and international companies. OMX faces competition from various European exchanges for new secondary listings. In addition, on occasion, issuers may transfer their listings from Nasdaq and OMX to other venues. While the reduction in initial listings or the loss of one or more large issuers could decrease the combined company’s listing revenues, it could cause an even more significant decrease in revenues from the quoting, reporting and trading of those issuers’ securities.

Our revenues may be affected by competition in the business for financial products.

We have grown our financial products business, which creates indices and licenses them for Nasdaq-branded financial products. Nasdaq-sponsored financial products are subject to intense competition from other ETFs, derivatives and structured products as investment alternatives. Our revenues may be adversely affected by increasing competition from competitors’ financial products designed to replicate or correlate with the performance of our financial products. In addition, the legal and regulatory climate, which supports the licensing of these financial products, has changed in a manner which is likely to adversely impact our ability to successfully license our products. Further, many other entrants have recently emerged who not only compete with us for future growth opportunities, but who may also introduce products that erode the position of our current offerings, thereby adversely affecting our business, financial conditions and operating results.

A decrease in trading volume will decrease the combined company’s trading revenues.

Trading volume is directly affected by economic and political conditions, broad trends in business and finance, changes in price levels of securities and the overall level of investor confidence. Weak economic conditions or a reduction in securities prices could result in a decline in trading volume. A decline in trading volume would lower revenues and may adversely affect the combined company’s operating results. In addition, investor confidence and trader interest, and thus trading volume, can be affected by factors outside Nasdaq’s or OMX’s control, such as the publicity surrounding investigations and prosecutions for corporate governance or accounting irregularities at listed companies.

Declines in the initial public offering market could have an adverse effect on Nasdaq’s and OMX’s revenues.

Stagnation or decline in the initial public offering market will impact the number of new listings on The NASDAQ Stock Market and the Nordic Exchange, and thus our related revenues. We recognize revenue from new listings on a straight-line basis over an estimated six-year service period.

The combined company may experience fluctuations in its operating results.

The financial services industry is risky and unpredictable and is directly affected by many national and international factors beyond our control. Any one of these factors could have a material adverse effect on the combined company’s business, financial condition and operating results by causing a substantial decline in the financial services markets and reduced trading volume.

 

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Additionally, since borrowings under the credit facility that we entered into in connection with the Offer bear interest at variable rates and we do not have interest rate hedges in place on this debt, any increase in interest rates will increase the combined company’s interest expense and reduce its cash flow. Other than variable rate debt, we believe our business has relatively large fixed costs and low variable costs, which magnifies the impact of revenue fluctuations on the combined company’s operating results. As a result, a decline in our revenue may lead to a relatively larger impact on operating results. A substantial portion of the combined company’s operating expenses will be related to personnel costs, regulation and corporate overhead, none of which can be adjusted quickly and some of which cannot be adjusted at all. The combined company’s operating expense levels will be based on our expectations for future revenue. If actual revenue is below management’s expectations, or if the combined company’s expenses increase before revenues do, both revenues less liquidity rebates, brokerage, clearance and exchange fees and operating results would be materially and adversely affected. Because of these factors, it is possible that the combined company’s operating results or other operating metrics may fail to meet the expectations of stock market analysts and investors. If this happens, the market price of Nasdaq Common Stock is likely to decline.

The combined company’s results of operations may differ significantly from the unaudited pro forma condensed combined financial data included in this Proxy Statement/Prospectus.

This Proxy Statement/Prospectus includes unaudited pro forma condensed combined financial statements to illustrate the effects of the Offer on the historical financial position and operating results of Nasdaq and OMX. The unaudited pro forma condensed combined statements of income combine the historical consolidated financial statements of income of Nasdaq and OMX, giving effect to the Offer as if it had been completed on January 1, 2006. The unaudited sheet pro forma condensed combined balance sheet combines the historical consolidated balance sheets of Nasdaq and OMX, giving effect to the Offer as if it occurred on June 30, 2007. This pro forma financial information is presented for illustrative purposes only and does not necessarily indicate the results of operations or the combined financial position that would have resulted had the Offer been completed at the beginning of the periods presented, nor is it indicative of the results of operations in future periods or the future financial position of the combined company.

The combined company must control its costs to remain profitable.

We base our cost structure on historical and expected levels of demand for our products and services. A decline in the demand for the combined company’s products and services may reduce the combined company’s revenues without a corresponding decline in its expenses since the combined company may not be able to adjust its cost structure on a timely basis. The combined company’s failure to achieve its goals on cost savings will have an adverse impact on the combined company’s results of operations. The combined company may fail in its initiatives to increase its business.

The combined company may not be able keep up with rapid technological and other competitive changes affecting its industry.

The markets in which the combined company will compete are characterized by rapidly changing technology, evolving industry standards, frequent enhancements to existing products and services, the introduction of new services and products and changing customer demands. If the Nasdaq or OMX platforms fail to function as expected, the combined company’s business would be negatively affected. In addition, the combined company’s business, financial condition and operating results may be adversely affected if the combined company cannot successfully develop, introduce or market new services and products or if it needs to adopt costly and customized technology for its services and products. Further, the combined company’s failure to anticipate or respond adequately to changes in technology and customer preferences, or any significant delays in product development efforts, could have a material adverse effect on its business, financial condition and operating results.

 

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System limitations, failures or security breaches could harm the combined company’s business.

Nasdaq’s and OMX’s businesses depend on the integrity and performance of the computer and communications systems supporting it. If the combined company’s systems cannot expand to cope with increased demand or otherwise fail to perform, we and OMX could experience unanticipated disruptions in service, slower response times and delays in the introduction of new products and services. These consequences could result in lower trading volumes, financial losses, decreased customer service and satisfaction and regulatory sanctions. Nasdaq and OMX have experienced occasional systems failures and delays in the past and could experience future systems failures and delays.

If Nasdaq’s or OMX’s trading volume increases unexpectedly, the combined company will need to expand and upgrade its technology, transaction processing systems and network infrastructure. We do not know whether it will be able to accurately project the rate, timing or cost of any increases, or expand and upgrade its systems and infrastructure to accommodate any increases in a timely manner.

Nasdaq’s and OMX’s systems and operations also are vulnerable to damage or interruption from human error, natural disasters, power loss, sabotage or terrorism, computer viruses, intentional acts of vandalism and similar events. We have active and aggressive programs in place to identify and minimize our exposure to these vulnerabilities and work in collaboration with the technology industry to share corrective measures with our business partners. Although we currently maintain and expect to maintain multiple computer facilities that are designed to provide redundancy and back-up to reduce the risk of system disruptions and have facilities in place that are expected to maintain service during a system disruption, such systems and facilities may prove inadequate. Any system failure that causes an interruption in service or decreases the responsiveness of the combined company’s services could impair its reputation, damage its brand name and negatively impact its business, financial condition and operating results.

The implementation of MiFID may increase competition for quoting, trade execution and reporting revenues in Europe.

The combined company’s competitive position could be adversely affected by legislation and regulation implementing the European Markets in Financial Instruments Directive, which we refer to as MiFID, which requires all European Union countries to have MiFID regulation in force by November 1, 2007. MiFID is intended to create a unified European financial services market, with common regulation regarding investments and trading in European Union countries. MiFID is intended to enable greater transparency and competition among exchanges (regulated markets), investment firms and banks who internalize their order flow (systematic internalizers), and multilateral trading facilities. MiFID encourages competition for quotation, trade execution, trade reporting and market data distribution and introduces a European-wide requirement for best execution by requiring investment firms to establish and publish execution policies for all traded instruments.

MiFID provides that trades may be executed (in addition to regulated exchange trading) on multilateral trading facilities via over-the-counter trading, or through systematic internalization. As a result, MiFID creates an opportunity for new multilateral trading facilities, over-the-counter and internalization arrangements to be developed on either a single country or a pan-European basis, thereby removing entry barriers and facilitating entry of alternative off-exchange trading facilities and increasing the attractiveness of such alternative facilities to users. In addition, investment firms will have to ensure that they obtain the “best execution” conditions for their clients, and will therefore have to direct orders to the most favorable execution venue, without any regulatory incentive to favor established regulated markets.

Taken together, these changes to the regulatory environment are likely to make it easier for multilateral trading facilities to establish themselves in Europe as low-cost alternatives to regulated exchanges, thereby increasing the level of competition with and between market operators. OMX will face competition from other exchanges as well as from multilateral trading facilities and alternative trading systems (including a move toward greater systematic internalization by member firms outside OMX’s exchanges) and this competition may

 

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intensify in the near future especially as technological advances create pressure to reduce the costs of trading. Increased competition from alternative trading facilities and operators could cause the combined company to lose market share or to lower its fees in order to remain competitive, either of which could lead to lower revenues and/or lower margins, harming profitability.

The adoption and implementation of Regulation NMS by the S.E.C. could adversely affect our business.

On April 6, 2005, the S.E.C. adopted Regulation NMS. Regulation NMS’s four primary components are: the Order Protection Rule, the Access Rule, the Market Data Rule and the Sub-Penny Rule. We have incurred technological and other costs in changing our systems and operations so that we can comply with these rules. Although the major provisions of Regulation NMS have largely been phased in over the course of 2007, the impact of Regulation NMS is hard to predict and there may be problems or competitive challenges that we do not foresee that adversely affect our business as Regulation NMS is implemented. Regulation NMS may increase competition in securities listed on The NASDAQ Stock Market or other exchanges from existing or new competitors.

Regulatory changes and changes in market structure could have a material adverse effect on our business.

Nasdaq and OMX operate in a highly regulated industry. In recent years, the securities trading industry and, in particular, the securities markets, have been subject to significant regulatory changes. Moreover, the securities markets have been the subject of increasing governmental and public scrutiny in response to a number of recent developments and inquiries. Any of these factors or events may result in future regulatory or other changes, although we cannot predict the nature of these changes or their impact on our business at this time. The combined company’s market participants also operate in a highly regulated industry. The S.E.C., the Swedish Financial Supervisory Authority, which we refer to as the SFSA, and other regulatory authorities could impose regulatory changes that could impact the ability of Nasdaq’s and OMX’s market participants to use The Nasdaq Market Center or the Nordic Exchange or could adversely affect The NASDAQ Stock Market or the Nordic Exchange. Regulatory changes by the S.E.C., the SFSA or other regulatory authorities could result in the loss of a significant number of market participants or a reduction in trading activity on The NASDAQ Stock Market or the Nordic Exchange.

The regulatory framework under which Nasdaq and OMX operate and new regulatory requirements or new interpretations of existing regulatory requirements could require substantial time and resources for compliance, which could make it difficult and costly for the combined company to operate the businesses.

Under current U.S. federal securities laws, changes in Nasdaq’s rules and operations, including our pricing structure, must be reviewed, and in many cases explicitly approved by the S.E.C. The S.E.C. may approve, disapprove, or recommend changes to proposals that Nasdaq submits. In addition, the S.E.C. may delay either the approval process or the initiation of the public comment process.

OMX is subject to regulatory oversight in all the countries in which it operates regulated businesses, such as operating exchanges or CSDs. The countries in which OMX is currently regulated are Sweden, Finland, Denmark, Iceland, Estonia, Lithuania and Latvia.

OMX has, in all the aforementioned countries, received authorization from the relevant authorities to conduct its regulated business activities. The authorities may revoke this authorization if OMX does not suitably carry out its regulated business activities. The authorities are also entitled to request that OMX adopt measures in order to ensure that OMX continues to fulfill the authorities’ requirements.

Furthermore, OMX holds minority stakes in other regulated entities. OMX owns approximately 10% of the Oslo Stock Exchange, approximately 24% of the United Kingdom derivatives exchange EDX London, 3% of the Bulgarian Stock Exchange and approximately 33% of the International Exchange St. Petersburg.

 

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In addition, certain of OMX’s customers also operate in a highly regulated industry. Regulatory authorities with jurisdiction over OMX and the exchanges it operates could impose regulatory changes that could impact the ability of OMX’s customers to use one or more of the exchanges operated by OMX. The loss of a significant number of customers or a reduction in trading activity on any of the exchanges comprising the Nordic Exchange as a result of such changes could have a material adverse effect on the combined company’s business, financial condition and operating results. Certain of OMX’s customers are themselves exchanges which outsource certain technology functions to OMX, and thus the combined company would be particularly exposed to regulatory or other events impacting the global exchange industry.

Nasdaq is subject to extensive regulation that may harm its ability to compete with less regulated entities.

Under current U.S. federal securities laws, changes in our rules and operations, including our pricing structure, must be reviewed, and in many cases explicitly approved by the S.E.C. The S.E.C. may approve, disapprove or recommend changes to proposals that we submit. In addition, the S.E.C. may delay the initiation of the public comment process or the approval process. This delay in approving changes, or the altering of any proposed change, could have an adverse effect on Nasdaq’s business, financial condition and operating results. We must compete not only with ECNs that are not subject to the same S.E.C. approval process but also with other exchanges that have lower regulation and surveillance costs than us. There is a risk that trading will shift to exchanges that charge lower fees because, among other reasons, they spend significantly less on regulation.

In addition, Nasdaq’s registered broker-dealer subsidiaries, Nasdaq Execution Services, LLC and NASDAQ Option Services, LLC are subject to regulation by the S.E.C., FINRA and other self-regulatory organizations. Any failure to comply with these broker-dealer regulations could have a material effect on the operation of our business, financial condition and operating results. These subsidiaries are subject to regulatory requirements intended to ensure their general financial soundness and liquidity, which require that they comply with certain minimum capital requirements. The S.E.C. and FINRA impose rules that require notification when net capital falls below certain predefined criteria, dictate the ratio of debt to equity in the regulatory capital composition of a broker-dealer and constrain the ability of a broker-dealer to expand its business under certain circumstances. Additionally, the Uniform Net Capital Rule and NYSE and FINRA rules impose certain requirements that may have the effect of prohibiting a broker-dealer from distributing or withdrawing capital and requiring prior notice to the S.E.C., the NYSE and FINRA for certain withdrawals of capital.

Nasdaq has self-regulatory obligations and also operates for-profit businesses, and these two roles may create conflicts of interest.

We have obligations to regulate and monitor activities on The NASDAQ Stock Market and ensure compliance with applicable law and the rules of our market by market participants and Nasdaq-listed companies. The S.E.C. staff has expressed concern about potential conflicts of interest of “for-profit” markets performing the regulatory functions of a self-regulatory organization. Although Nasdaq outsources the majority of its market regulation functions to FINRA, Nasdaq does perform regulatory functions related to its listed companies and its market. In addition, as part of Nasdaq’s application for exchange registration, Nasdaq has agreed that 20% of the directors of its exchange subsidiary will be elected by members of the exchange rather than the equity holders of the subsidiary. Any failure by Nasdaq to diligently and fairly regulate its market or to otherwise fulfill its regulatory obligations could significantly harm its reputation, prompt S.E.C. scrutiny and adversely affect the combined company’s business and reputation.

OMX’s reputation depends on the diligent performance of its self-regulatory obligations.

The Nordic Exchange monitors trading on the Nordic Exchange and compliance with listing standards. It also monitors the listing of equities and other financial instruments. The prime objective with such monitoring activities is to maintain confidence in the exchanges among the general public. The monitoring functions within the Nordic Exchange are the responsibility of the Surveillance Committees. The Surveillance Committees are

 

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established by the Board of Directors of the OMX Nordic Exchange Stockholm AB in order to strengthen the integrity of and confidence in the Nordic Exchange and to avoid conflicts of interest. Each of the Surveillance Committees consist of five members, three of whom are independent of OMX or qualified owners of OMX. Any failure by OMX to diligently and fairly regulate its market could significantly harm its reputation, prompt scrutiny from its regulators and adversely affect its business and reputation.

Recent S.E.C. rulemaking has liberalized the foreign private issuer deregistration rules.

In March 2007, the S.E.C. adopted rules that make it easier for foreign private issuers to deregister and terminate their S.E.C. reporting obligations. Under the new deregistration rule, a foreign private issuer can deregister equity securities if its average U.S. trading volume over a 12-month period represents 5% or less of its worldwide trading volume, so long as it meets certain requirements. Once a foreign private issuer’s securities are deregistered and the issuer ceases its Exchange Act reporting, those securities are no longer eligible for trading on any public exchange in the U.S. As a result, we may face the loss of listing and trading services revenues associated with foreign private issuers who chose to deregister under the new S.E.C. rules.

Regulatory recognition of foreign exchanges may harm the combined company’s ability to compete with less regulated entities.

Under current U.S. federal securities laws, foreign exchanges seeking to operate in the U.S. must meet substantially all of the regulatory requirements we face. The S.E.C. has the authority to exempt foreign exchanges from these requirements and currently has granted one foreign exchange, Tradepoint LLC, an exemption based on low volume and other restrictions. Consequently, Virt-x (the successor to Tradepoint) is the only foreign exchange able to operate in the U.S. without meeting all the regulatory requirements we face. Recently, the S.E.C. has begun discussing the possibility of reciprocal recognition of exchanges operating under comparable regulatory regimes. Based on the extent and manner in which the S.E.C. pursues reciprocal recognition, there is a possibility that other foreign exchanges may enter the U.S. market without meeting all the regulatory requirements we meet. The entry of foreign exchanges into the U.S. market without complying with U.S. regulatory obligations would create additional competitive pressure on the combined company, particularly in the trading of dual-listed foreign securities.

The legal and regulatory environment in the United States may make it difficult for The NASDAQ Stock Market to attract the secondary listings of non-U.S. companies.

The combined company’s U.S. exchange, The NASDAQ Stock Market, will continue to compete to obtain the listing of non-U.S. issuer securities (in addition to the listing of U.S. issuer securities). However, the legal and regulatory environment in the United States, as well as the perception of this environment, has made and may continue to make it more difficult for Nasdaq to attract these listings and adversely affect the combined company’s competitive position. For example, the Sarbanes-Oxley Act of 2002 imposes a stringent set of corporate governance, reporting and other requirements on publicly listed companies in the U.S. Significant resources are necessary for issuers to come into and remain in compliance with the requirements of the Sarbanes-Oxley Act, which has had, and may continue to have, an impact on the ability of Nasdaq to attract and retain listings. At the same time, international companies are increasingly seeking access to the U.S. markets through private transactions that do not require listing or trading in the U.S. public markets, such as through Rule 144A transactions. Non-U.S. issuers may choose to list with non-U.S. securities exchanges exclusively without a secondary listing in the United States because they perceive the U.S. regulatory requirements and the U.S. litigation environment as too cumbersome and costly. If Nasdaq is unable to successfully attract the listing business of non-U.S. issuers, the perception of The NASDAQ Stock Market as a premier listing venue may be diminished, and the combined company’s competitive position may be adversely affected or its operating results could suffer.

 

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Following the completion of the Offer, the combined company’s Nordic Exchange will not be subject to this constraint. In addition, we believe, based on the S.E.C.’s Fact Sheet on Potential Cross-Border Exchange Mergers, dated June 16, 2006, that listed companies on the Nordic Exchange are not, and will not become as a consequence of the completion of the Offer, subject to the requirements of the Sarbanes-Oxley Act unless they otherwise choose to list or register their securities in the United States. However, there can be no assurances that non-U.S. issuers that do not list on The NASDAQ Stock Market will elect to list on the Nordic Exchange rather than other non-U.S. exchanges.

The combined company will be exposed to clearing risk.

OMX clears a range of equity-related and fixed-income-related derivative products. OMX assumes the counterparty risk for all transactions that are cleared through its markets and guarantees that its cleared contracts will be honored. As protection against the risks that are associated with its derivatives clearing business, OMX enforces minimum financial and operational criteria for membership eligibility, requires members and investors to provide collateral, and maintains established risk policies and procedures to ensure that the counterparty risks are properly monitored and pro-actively managed, but none of these measures provide absolute assurance against defaults by OMX’s counterparties on their obligations. Moreover, while collateralizing member and investor risk exposures is designed to ensure that sufficient collateral is maintained to compensate for the default risk incurred, no guarantee can be given that the collateral provided will at all times be sufficient. Although OMX maintains, and the combined company will maintain, clearing capital resources to serve as an additional layer of protection to help ensure that the combined company is able to meet its obligations, these resources may not be sufficient. Indebtedness to be incurred by the combined company in connection with the Offer could limit the combined company’s flexibility in operation of its clearing business.

Failure to attract and retain key personnel may adversely affect the combined company’s ability to conduct its business.

The combined company’s future success depends, in large part, upon its ability to attract and retain highly qualified professional personnel. Competition for key personnel in the various localities and business segments in which the combined company will operate is intense. The combined company’s ability to attract and retain key personnel, in particular senior officers, will be dependent on a number of factors, including prevailing market conditions and compensation packages offered by companies competing for the same talent. There is no guarantee that the combined company will have the continued service of key employees who will be relied upon to execute its business strategy and identify and pursue strategic opportunities and initiatives. In particular, the combined company may have to incur costs to replace senior executive officers or other key employees who leave, and the combined company’s ability to execute its business strategy could be impaired if it is unable to replace such persons in a timely manner.

The combined company will be highly dependent on the continued services of Robert Greifeld, our current President and Chief Executive Officer and the anticipated Chief Executive Officer of the combined company, Magnus Böcker, the current Chief Executive Officer of OMX and the anticipated President of the combined company, and other executive officers and key employees who possess extensive financial markets knowledge and technology skills. Other than employment agreements with Mr. Greifeld and Nasdaq’s general counsel, we do not have employment agreements with key executive officers, which would prevent them from leaving and competing with us. We do not maintain “key person” life insurance policies on any of our executive officers, managers, key employees or technical personnel. The loss of the services of these persons for any reason, or the loss of the services of similarly-positioned, key OMX employees, as well as any negative market or industry perception arising from those losses, could have a material adverse effect on the combined company’s business, financial condition and operating results.

 

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We are subject to risks relating to litigation and potential securities laws liability.

Many aspects of our business potentially involve substantial liability risks. Although we are immune from private suits for self-regulatory organization activities, this immunity only covers certain of our activities, and we and our broker-dealer affiliates could be exposed to liability under federal and state securities laws, other federal and state laws and court decisions, and rules and regulations promulgated by the S.E.C. and other regulatory agencies. In addition, the combined company will be subject to liability under the laws of certain foreign jurisdictions. These risks include, among others, potential liability from disputes over the terms of a trade, or claims that a system failure or delay cost a customer money, that we entered into an unauthorized transaction or that we provided materially false or misleading statements in connection with a securities transaction. As we intend to defend any such litigation actively, significant legal expenses could be incurred.

In addition, Nasdaq is subject to oversight by the S.E.C. The S.E.C. regularly examines Nasdaq and its broker-dealer affiliates for compliance with Nasdaq’s obligations under the securities laws. In the case of non-compliance with our obligations under those laws, Nasdaq or its broker-dealer affiliates could be subject to investigation and judicial or administrative proceedings that may result in substantial penalties.

OMX is regulated both at the national level in several countries and at the European Union level. Implementation and application of these regulations may be undertaken by one or more regulatory authorities, which may challenge compliance with one or more aspects of such regulations. If a regulatory authority makes a finding of non-compliance, conditional fines can be imposed and OMX’s license can be revoked.

Failure to protect Nasdaq’s and OMX’s intellectual property rights could harm the combined company’s brand-building efforts and ability to compete effectively.

To protect Nasdaq’s and OMX’s intellectual property rights, we rely, and the combined company will rely, on a combination of trademark laws, copyright laws, patent laws, trade secret protection, confidentiality agreements and other contractual arrangements with its affiliates, clients, strategic partners and others. The protective steps that the combined company will take may be inadequate to deter misappropriation of its proprietary information. The combined company may be unable to detect the unauthorized use of, or take appropriate steps to enforce, its intellectual property rights. Nasdaq has registered, or applied to register, its trademarks in the United States and in over 50 foreign jurisdictions and has pending U.S. and foreign applications for other trademarks. Nasdaq also maintains copyright protection on its Nasdaq-branded materials and pursues patent protection for Nasdaq-developed inventions and processes. OMX claims copyright to the software products developed by OMX, and holds a number of patents, patent applications and licenses, including the names OMX, OMX Nordic Exchange, Genium, OMX Nordic Exchange Stockholm AB, OMX Exchange and Helsinki Stock Exchange. Effective trademark, copyright, patent and trade secret protection may not be available in every country in which we offer or the combined company intends to offer its services. Failure to protect Nasdaq’s and OMX’s intellectual property adequately could harm the combined company’s brand and affect its ability to compete effectively. Further, defending the combined company’s intellectual property rights could result in the expenditure of significant financial and managerial resources.

Damage to the combined company’s reputation could have a material adverse effect on its businesses.

One of the combined company’s competitive strengths will be its strong reputation and brand name. Various issues may give rise to reputational risk, including issues relating to:

 

   

the representation of the combined company’s business in the media;

 

   

the accuracy of the combined company’s financial statements and other financial and statistical information;

 

   

the quality of the combined company’s corporate governance structure; and

 

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the quality of the combined company’s products, including the reliability of its transaction-based business, the accuracy of the quote and trade information provided by its market information services business and the accuracy of calculations used by its financial products business for indices and unit investment trusts.

Damage to the combined company’s reputation could cause some issuers not to list their securities on the combined company’s exchanges, as well as reduce the trading volume on the combined company’s exchanges or cause it to lose customers in its market information services or financial products businesses. This, in turn, may have a material adverse effect on the combined company’s business, financial condition and operating results.

We are a holding company that depends on cash flow from our subsidiaries to meet our obligations.

As of August 1, 2006, Nasdaq is a holding company with no direct operating businesses other than the equity interests of our subsidiaries. The combined company will retain a holding company structure and, accordingly, all our operations will be conducted by our subsidiaries. As a holding company, the combined company will require dividends and other payments from its subsidiaries to meet cash requirements or to pay dividends. If the combined company’s subsidiaries are unable to pay it dividends and make other payments to it when needed, it will be unable to satisfy its obligations.

OMX shareholder approval is required for the payment of dividends or distributions; however, no prior approval from any regulatory body is necessary for such payment. Nevertheless, minimum capital requirements mandated by financial supervisory authorities having jurisdiction over the exchanges operated by OMX, which we refer to as FSAs, indirectly restrict the amount of any dividend paid. Failure to satisfy minimum capital requirements can result in revocation of the licenses of the exchanges operated by OMX. Minimum capital requirements vary between the different FSAs. In Iceland, the minimum capital requirement is approximately 60 million Icelandic Kronor. In Denmark, the minimum capital requirement is 40 million Danish Kronor, which will be decreased to 8 million Danish Kronor in November 2007. FSAs in other jurisdictions in which OMX operates generally only require that capital be sufficient for exchange and clearing operations. To the extent the applicable FSA does not permit the companies operating the Nordic Exchange or the Baltic Market to dividend or distribute their earnings upstream, the combined company will be subject to increased demands on its cash resources from its other operations, which could have a material adverse effect on the combined company’s business, financial condition and operating results.

Future acquisitions, partnerships and joint ventures may require significant resources and/or result in significant unanticipated losses, costs, or liabilities.

Over the past three years, acquisitions including the acquisitions of INET and Nasdaq Execution Services, LLC (formerly Brut, LLC) and the proposed combination with OMX, have been a significant factor in Nasdaq’s growth. Although we cannot predict the combined company’s rate of growth as the result of acquisitions with complete accuracy, we believe that additional acquisitions or entering into partnership and joint ventures will be important to the combined company’s growth strategy. Many of the other potential purchasers of assets in our industry have greater financial resources than we have. Therefore, we cannot be sure that we will be able to complete future acquisitions on terms favorable to us.

We may finance future acquisitions by issuing additional equity and/or debt. The issuance of additional equity in connection with any such transaction could be substantially dilutive to existing shareholders. The issuance of additional debt could increase our leverage substantially. In addition, announcement or implementation of future transactions by us or others could have a material effect on the price of our stock. We could face financial risks associated with incurring additional debt, particularly if the debt resulted in significant incremental leverage. Additional debt may reduce our liquidity, curtail our access to financing markets, impact our standing with the credit agencies and increase the cash flow required for debt service. Any incremental debt incurred to finance an acquisition could also place significant constraints on the operation of our business.

 

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These equity, debt and managerial commitments may impair the operation of our businesses. Furthermore, any future acquisitions of businesses or facilities could entail a number of additional risks, including:

 

   

problems with effective integration of operations;

 

   

the inability to maintain key pre-acquisition business relationships;

 

   

increased operating costs;

 

   

the diversion of our management team from its other operations;

 

   

problems with regulatory bodies;

 

   

exposure to unanticipated liabilities;

 

   

difficulties in realizing projected efficiencies, synergies and cost savings; and

 

   

changes in our credit rating and financing costs.

OMX operates in various emerging markets that are subject to greater political, economic, and social uncertainties than developed countries.

The operations of OMX are subject to the risk inherent in international operations, including but not limited to, risks with respect to operating in Central and Eastern Europe, the Middle East and Asia. Some of these economies are perceived to be subject to greater political, economic and social uncertainties than countries with more developed institutional structures. Political, economic or social events or developments in one or more of these countries could adversely affect OMX’s operations and its related financial results and, in turn, the operations and financial results of the combined company.

OMX has invested substantial capital in system platforms, including Genium, and a failure to successfully implement such systems could adversely affect OMX’s business.

In its technology operations, OMX invests substantial amounts in the development of system platforms. Although investments are carefully planned, there can be no assurance that the demand for such platforms will justify the related investments and that the future levels of orders will be sufficient to generate an acceptable return on such investments. In particular, OMX’s Market Technology business area has invested substantial capital in its development of next-generation information technology for marketplaces called Genium. If OMX is unable to successfully implement Genium, or if OMX fails to generate adequate revenue from planned system platforms, or if it fails to do so within the envisioned timeframe, it could have an adverse effect on the combined company’s results of operations and financial condition.

If the Offer is completed, OMX’s technology operations may be negatively affected.

If the Offer is completed, certain current or potential customers of OMX’s technology operations, who do not currently view OMX as a competitor, may view the combined company as a competitor. As a result, these customers may limit or eliminate their use of OMX’s technology operations, and, as a result, the performance of OMX’s technology operations may suffer.

After completion of the Offer, the combined company will be exposed to greater currency risk.

After completion of the Offer, the combined company will have operations in the U.S. and several of the Nordic and Baltic markets and will thus have significant exposure to exchange rate movements between the Swedish Krona, Danish Krone, Icelandic Króna, Euro, U.S. dollar and other foreign currencies. Significant inflation or disproportionate changes in foreign exchange rates with respect to one or more of these currencies could occur as a result of general economic conditions, acts of war or terrorism, changes in governmental monetary or tax policy or changes in local interest rates. While we have certain currency hedges in place, these hedges may not be effective and, as a result, fluctuations in exchange rates may increase the amount of U.S. dollars we are required to pay for OMX Shares.

 

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In addition, these exchange rate differences will also affect the translation of OMX’s results of operations and financial condition into U.S. dollars as part of the preparation of the combined company’s consolidated financial statements.

We may be required to pay a higher price for some OMX Shares as a result of compulsory acquisition proceedings under Swedish law.

In the event that Nasdaq obtains more than 90% of the OMX Shares, Nasdaq intends to commence a compulsory acquisition procedure under the Swedish Companies Act to acquire all remaining OMX Shares.

The purchase price for the OMX Shares acquired through a compulsory acquisition procedure will be determined by an arbitration tribunal. The Swedish Companies Act provides that the purchase price for the remaining OMX Shares will be equivalent to the value of the consideration in the Offer, unless there are any special circumstances at hand that call for a different price. It may take up to two years or more from initiation of the compulsory acquisition procedure until the arbitration tribunal decides on the purchase price. Thereafter, the purchase price will be distributed to the shareholders whose OMX Shares were acquired through the compulsory acquisition procedure, together with interest earned at a market rate set by the Swedish Central Bank pursuant to Swedish law.

Nasdaq may elect to request advance title to the OMX Shares to be acquired in the compulsory acquisition procedure, in accordance with the Swedish Companies Act. Advance title means that full ownership is obtained by Nasdaq with respect to the remaining OMX Shares before the arbitration proceedings regarding the purchase price have been completed. The arbitration tribunal’s granting of advance title would be subject to Nasdaq providing satisfactory security for payment of the purchase price and the accrued interest thereon.

Nasdaq may also purchase any OMX Shares that remain outstanding after completion of the Offer for cash in market or private transactions. However, if Nasdaq purchases OMX Shares within a period of nine months after payment has commenced in the Offer on terms which are more favorable than the terms of the Offer, the OMX Nordic Exchange Stockholm AB Rules Concerning Public Takeover Bids in the Stock Market provide that Nasdaq must make a corresponding increased payment to the OMX shareholders who tendered their OMX Shares in the Offer.

As a result of the compulsory acquisition proceedings under Swedish law, we may ultimately have to pay, in the aggregate, a higher price per OMX Share in order to purchase the remaining OMX Shares that are outstanding after completion of the Offer.

Holders of OMX Shares that do not accept the Offer and whose OMX Shares are acquired in the compulsory acquisition proceedings may not receive payment for a significant period after completion of the Offer.

As described above, in the event that Nasdaq obtains more than 90% of the OMX Shares, Nasdaq intends to commence a compulsory acquisition procedure under the Swedish Companies Act to acquire all remaining OMX Shares.

It may take up to two years or more from initiation of the compulsory acquisition procedure until the arbitration tribunal decides on the purchase price. Thereafter, the purchase price will be distributed to the holders of OMX Shares acquired through the compulsory acquisition procedure, together with interest thereon at a market rate set by the Swedish Central Bank pursuant to Swedish law.

If, as described above, advance title to the OMX Shares is obtained by Nasdaq, Nasdaq may be required to make payment for part of the compulsory acquisition price prior to completion of the arbitration proceedings. In particular, following an award of advance title and at the request of a party to the proceedings or the legal representative for the minority shareholders, the arbitration tribunal may, but is not required to, issue a separate award in respect of that portion of the purchase price that is not disputed by Nasdaq. In that case, Nasdaq would be obliged to pay such portion prior to the final arbitration award. There is no guarantee, however, that such early payment will be awarded.

 

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As a result, holders of OMX Shares that do not accept the Offer and whose OMX Shares are subsequently acquired in the compulsory acquisition proceedings may not receive payment for a significant period after completion of the Offer.

The value of our LSE investment could decline due to fluctuations in the LSE’s stock price, the foreign currency exchange rate and payment of dividends.

Our investment in the LSE will become an investment of the combined company. The market value of our investment in the LSE is subject to market price volatility. We currently do not have any market value hedges on our investments, including our investment in the LSE. To the extent that we have not hedged our exposure to a decrease in the value of these securities, the value of our LSE investment could decrease. To the extent we are not entirely hedged with respect to exchange rate fluctuations, we also are subject to the risk of fluctuations in the exchange rate related to our investment.

Although we recorded dividend income of $14.5 million for the six months ended June 30, 2007, there is no assurance that the LSE will pay dividends to shareholders in future periods or that any dividends will be in comparable amounts. In addition, there is no assurance that we will retain our LSE shares.

The LSE is subject to certain risks.

The LSE is subject to many of the same risks we suffer. To the extent these risks affect the future performance of the LSE businesses and, in turn, the market price of LSE share capital, the value of our investment in the LSE could be materially affected. In addition, the LSE recently announced its intention to acquire the Borsa Italiana SpA. If this acquisition is successfully consummated, the LSE could be subject to a variety of additional risks, including the risk that the integration of the Borsa Italiana SpA’s operations with the LSE’s operations will not be successful. As a result, the value of our investment in the LSE could be materially affected.

Risks Relating to an Investment in Nasdaq Common Stock

Volatility in our stock price could adversely affect our shareholders.

The market price of Nasdaq Common Stock is likely to be volatile. Broad market and industry factors may adversely affect the market price of Nasdaq Common Stock, regardless of its actual operating performance. Factors that could cause fluctuations in our stock price may include, among other things:

 

   

actual or anticipated variations in our quarterly operating results;

 

   

changes in financial estimates by us or by any securities analysts who might cover Nasdaq Common Stock;

 

   

conditions or trends in our industry, including trading volumes, regulatory changes or changes in the securities marketplace;

 

   

announcements by us or our competitors of significant acquisitions, strategic partnerships or divestitures;

 

   

announcements of investigations or regulatory scrutiny of our operations or lawsuits filed against us;

 

   

additions or departures of key personnel; and

 

   

sales of Nasdaq Common Stock, including sales of Nasdaq Common Stock by our directors and officers or our strategic investors.

The market price of Nasdaq Common Stock could be negatively affected by sales of substantial amounts of Nasdaq Common Stock in the public markets.

Sales of a substantial number of shares of Nasdaq Common Stock in the public markets following the Offer, or the perception that these sales might occur, and the issuance of new shares of Nasdaq Common Stock in connection with the Offer, could cause the market price of Nasdaq Common Stock to decline or could impair our

 

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ability to raise capital through a future sale of, or pay for acquisitions using, our equity securities. As of June 30, 2007, there were 112,921,954 shares of Nasdaq Common Stock outstanding. The number of freely transferable shares of Nasdaq Common Stock will increase by up to 60,561,515 shares if all of the OMX Shares are tendered in the Offer. In addition, the number of freely transferable shares of Nasdaq Common Stock will increase upon any exercise of outstanding options pursuant to our stock compensation and stock award plan for our employees. There were 5,115,606 options exercisable as of June 30, 2007 at a weighted average exercise price of $9.11. The number of shares of Nasdaq Common Stock outstanding will also increase upon any conversion of the Nasdaq Voting Notes, which are convertible at a conversion price of $14.50 per share into approximately 30.7 million shares of Nasdaq Common Stock, or any exercise of warrants held by Silver Lake Partners and Hellman & Friedman LLC or their respective affiliates, which are exercisable at a price of $14.50 per share into approximately 5.0 million shares of Nasdaq Common Stock. The Nasdaq Voting Notes and the Nasdaq Common Stock underlying the Nasdaq Voting Notes and the warrants may only be sold pursuant to a registration statement or an exemption from registration. We have granted Silver Lake Partners and Hellman & Friedman LLC and their affiliates demand and piggyback registration rights with respect to the Nasdaq Voting Notes and the shares of Nasdaq Common Stock underlying those notes and warrants. Upon the sale of the shares or Nasdaq Voting Notes under a registration statement, those shares of Nasdaq Common Stock or Nasdaq Voting Notes will be freely transferable. In connection with the transactions contemplated by the Offer, we agreed with certain of the parties to the Voting Agreements that, except as required by law, while the Voting Agreements are in effect, we will not defer or delay any registration for sale under the U.S. securities laws of the Nasdaq Voting Securities (or any shares of Nasdaq Common Stock underlying the Nasdaq Voting Securities) held by such parties or discontinue any such registration.

We may not pay dividends on Nasdaq Common Stock in the immediate future.

Our current credit facilities limit our ability to pay dividends to shareholders. In the past, before our credit facilities were put in place, it was not our policy to declare or pay cash dividends on our shares. We intend to retain any future earnings for funding the combined company’s growth and meeting its obligations.

Provisions of our Restated Certificate of Incorporation and approved exchange rules, including provisions included to address S.E.C. concerns, and Delaware law could delay or prevent a change in control of us and entrench current management.

Our organizational documents place restrictions on the voting rights of certain shareholders. Our Restated Certificate of Incorporation limits the voting rights of persons (either alone or with related parties) owning more than 5% of the then outstanding votes entitled to be cast on any matter, other than NASD or any other person as may be approved by Nasdaq’s Board of Directors prior to the time such person owns more than 5% of the then outstanding votes entitled to be cast on any matter. Any change to the 5% voting limitation requires S.E.C. approval.

In response to the S.E.C.’s concern about a concentration of our ownership, our approved exchange rules include a rule prohibiting any member of the securities exchange operated by The NASDAQ Stock Market or any person associated with such a member beneficially owning more than 20% of our outstanding voting interests. S.E.C. consent is required for an exception or change in this rule. Exchange rules also require the S.E.C.’s approval of any business ventures with one of our members, subject to exceptions.

In addition, our organizational documents contain provisions that may be deemed to have an anti-takeover effect and may delay, deter or prevent a change of control of us, such as a tender offer or takeover proposal that might result in a premium over the market price for Nasdaq Common Stock. Additionally, certain of these provisions make it more difficult to bring about a change in the composition of Nasdaq’s Board of Directors, which could result in entrenchment of current management.

 

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In addition, our Restated Certificate of Incorporation and By-Laws:

 

   

require supermajority shareholder approval to remove directors;

 

   

do not permit shareholders to act by written consent or to call special meetings;

 

   

require certain advance notice for director nominations and actions to be taken at annual meetings;

 

   

require supermajority shareholder approval with respect to certain amendments to our Restated Certificate of Incorporation and By-Laws (including in respect of the provisions set forth above); and

 

   

authorize the issuance of undesignated preferred stock, or “blank check” preferred stock, that could be issued by Nasdaq’s Board of Directors without shareholder approval.

Section 203 of the Delaware General Corporation Law imposes restrictions on mergers and other business combinations between us and any holder of 15% or more (or, in some cases, a holder who previously held 15% or more) of the common stock. In general, Delaware law prohibits a publicly held corporation from engaging in a “business combination” with an “interested stockholder” for three years after the stockholder becomes an interested stockholder, unless the corporation’s board of directors and shareholders approve the business combination in a prescribed manner.

 

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THE SPECIAL MEETING OF HOLDERS OF NASDAQ VOTING SECURITIES

Time, Place and Purpose of the Nasdaq Special Meeting

The special meeting of holders of Nasdaq Voting Securities is scheduled to be held on [·], 2007, at [·] a.m., Eastern Standard Time, at [·]. The purpose of the Special Meeting is:

 

   

to approve the issuance of up to 60,561,515 shares of Nasdaq Common Stock, pursuant to our proposed combination with OMX, such combination to be effected through an offer for all the outstanding OMX Shares;

 

   

to approve an amendment to Nasdaq’s Restated Certificate of Incorporation to change Nasdaq’s name to “The NASDAQ OMX Group, Inc.” upon completion of our offer for all the outstanding OMX Shares; and

 

   

to transact such other business as may properly come before the meeting or any adjournment or postponement thereof.

Nasdaq’s Board of Directors recommends that you vote “for” the Share Issuance and “for” the Charter Amendment. For the reasons for this recommendation, see “The Offer—Nasdaq’s and OMX’s Reasons for the Offer.”

Who Can Vote at the Nasdaq Special Meeting

Only holders of record listed on the books of Nasdaq at the close of business on the Record Date of the following Nasdaq securities will be entitled to notice of, and to vote at, the Special Meeting:

 

   

Nasdaq Common Stock; and

 

   

Nasdaq Voting Notes.

As of the Record Date, there were outstanding [·] shares of Nasdaq Common Stock (including shares of restricted Nasdaq Common Stock entitled to vote at the Special Meeting). As of the Record Date, the Nasdaq Voting Notes were convertible into [·] shares of Nasdaq Common Stock.

The [·] shares of Nasdaq Common Stock outstanding as of the Record Date were held by approximately [·] holders of record. Each share of Nasdaq Common Stock has one vote, subject to the voting limitation in our Restated Certificate of Incorporation that generally prohibits a holder from voting in excess of 5% of the total voting power of Nasdaq. The holder of each Nasdaq Voting Note is entitled to the number of votes equal to the number of shares of Nasdaq Common Stock into which that Nasdaq Voting Note could be converted on the Record Date, subject to the 5% voting limitation contained in our Restated Certificate of Incorporation. The enclosed proxy card shows the number of Nasdaq Voting Securities that you are entitled to vote. Your individual vote is confidential and will not be disclosed to third parties. If you own Nasdaq Voting Securities through a broker, bank or other nominee and attend the Special Meeting, you should bring a letter from your broker, bank or other nominee identifying you as the beneficial owner of the Nasdaq Voting Securities and authorizing you to vote.

Shares that are held in Nasdaq’s treasury are not entitled to vote at the Special Meeting.

Quor um

In order to conduct business at the Special Meeting, a quorum must be present. The presence of the holders of at least a majority (greater than 50%) of the votes entitled to be cast by holders of the Nasdaq Voting Securities constitutes a quorum. We will treat shares of Nasdaq Common Stock represented by a properly signed and returned proxy, including abstentions and broker non-votes, as present at the Special Meeting for the purposes of determining the existence of a quorum. If a quorum is not present, it is expected that the Special Meeting will be adjourned or postponed to solicit additional proxies.

 

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Required Vote

Approval of the Share Issuance requires the affirmative vote of at least a majority of the votes present in person or represented by proxy at the Special Meeting and entitled to vote thereon.

Approval of the Charter Amendment requires the affirmative vote of at least a majority of our outstanding voting power.

For both proposals, you may vote “for,” “against” or “abstain.” If you “abstain,” it has the same effect as a vote “against” either the Share Issuance or the Charter Amendment. If you do not sign and send in your proxy card, do not vote using the telephone or Internet, or do not vote at the Special Meeting, it will have no effect on the vote on the Share Issuance, assuming that there is a quorum, but it will have the effect of a vote “against” the Charter Amendment. If you sign your proxy card or broker voting instruction card with no further instructions, your shares will be voted in accordance with the recommendations of Nasdaq’s Board of Directors described in this proxy.

Unless you give other instructions on your proxy card, the persons named as proxy holders on the proxy card will vote in accordance with the recommendations of Nasdaq’s Board of Directors. With respect to any other matter that properly comes before the meeting, the proxy holders will vote as recommended by Nasdaq’s Board of Directors or, if no recommendation is given, in their own discretion.

A djournments

If a quorum is not present at the Special Meeting, the Special Meeting may be adjourned from time to time until a quorum is present or represented. In addition, adjournments of the Special Meeting may be made for the purpose of soliciting additional proxies in favor of the Share Issuance or the Charter Amendment. Pursuant to our By-Laws, the chairman of the Special Meeting has the right and authority to adjourn the Special Meeting in the chairman’s sole discretion and without a vote of holders of Nasdaq Voting Securities, which adjournment may be for up to 30 days without further notice (unless a new record date is fixed for the adjourned Special Meeting) other than by an announcement made at the Special Meeting.

Manner of Voting

If you are a holder of Nasdaq Voting Securities and you hold your Nasdaq Voting Securities in your own name, you may submit your vote for or against the proposal submitted at the Special Meeting in person or by proxy. You may vote by proxy in any of the following ways:

 

   

by using the enclosed proxy card and mailing a completed and signed proxy card to the address listed on the proxy card using the provided self-addressed stamped envelope;

 

   

by telephone using the toll-free number shown on the enclosed proxy card; or

 

   

by visiting the website noted on the enclosed proxy card and voting through the Internet by no later than [·], Eastern Time, on [·], 2007.

Information and applicable deadlines for using the proxy card, or voting by telephone or through the Internet, are set forth in the enclosed proxy card instructions.

If your Nasdaq Voting Securities are registered in the name of a broker, bank or other nominee (which is also known as being held in “street name”), that broker, bank or other nominee has enclosed or will provide a voting instruction card for the holder to direct the broker, bank or other nominee how to vote its shares. Holders who hold securities in “street name” must return their instructions to their broker, bank or other nominee on how to vote their Securities. If a holder that holds securities in “street name” desires to attend the Special Meeting, the holder should bring a letter from its broker, bank or other nominee identifying the holder as the beneficial owner of such securities, confirming that such securities have not otherwise been voted and will not be voted via proxy, and authorizing the holder of Nasdaq Voting Securities to vote the securities or specifying how such securities had been voted.

 

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All Nasdaq Voting Securities represented by properly executed proxies or voting instructions (including those given by phone or through the Internet) received in time for the Special Meeting will, unless revoked, be voted in accordance with the instructions indicated on those proxies or voting instructions. If no instructions are indicated on a properly executed proxy card, the Nasdaq Voting Securities will be voted in accordance with the recommendation of the Nasdaq Board Of Directors and, therefore, “for” both Proposal One and Proposal Two.

If you are a holder of Nasdaq Voting Securities and your proxy indicates instructions for some, but not all, of the proposals, your votes will be cast as indicated on the specified proposals and as described in the preceding sentence for any proposal for which no instructions are indicated.

If you return a properly executed proxy card or voting instruction card and have indicated that you have abstained from voting on a proposal, your Nasdaq Voting Securities represented by the proxy will be considered present at the Special Meeting for purposes of determining a quorum, but will have the same effect as a vote against the proposal. Nasdaq urges you to mark each applicable box on the proxy card or voting instruction card to indicate how to vote your Nasdaq Voting Securities.

You may revoke your proxy at any time before it is voted by:

 

   

submitting a later-dated proxy by mail, fax, telephone or through the Internet; or

 

   

attending the Special Meeting and voting by paper ballot in person.

Attendance at the Special Meeting will not, in and of itself, constitute revocation of a previously granted proxy. If the Special Meeting is adjourned or postponed, it will not affect the ability of holders of Nasdaq Voting Securities to exercise their voting rights or to revoke any previously granted proxy using the methods described above.

Broker Non-Votes

Broker non-votes are securities held by banks, brokers or nominees for which, with respect to an item to be voted on, voting instructions have not been received from the beneficial owners or the persons entitled to vote those securities and with respect to which the bank, broker or nominee does not have discretionary voting power under rules applicable to broker-dealers. Broker non-votes, if any, will have no effect on the vote on the Share Issuance, assuming that there is a quorum, but will have the effect of a vote “against” the Charter Amendment.

Solicitation of Proxies

Nasdaq will incur expenses in connection with the printing and mailing of this Proxy Statement/Prospectus. We have retained the services of Mellon Investor Services LLC to aid in the solicitation of proxies from banks, brokers, nominees and intermediaries. We estimate that we will pay Mellon Investor Services LLC a fee of $12,500 for its services, plus out of pocket expenses. Nasdaq and its proxy solicitor also will request banks, brokers and other intermediaries holding Nasdaq Voting Securities beneficially owned by others to send this Proxy Statement/Prospectus to, and obtain proxies from, the beneficial owners and will, if requested, reimburse the record holders for their reasonable out-of-pocket expenses in so doing. Solicitation of proxies by mail may be supplemented by telephone and other electronic means, advertisements and personal solicitation by the directors, officers or employees of Nasdaq. No additional compensation will be paid to Nasdaq directors, officers or employees for solicitation.

 

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PROPOSALS TO BE CONSIDERED AND VOTED UPON BY HOLDERS OF NASDAQ VOTING SECURITIES AT THE SPECIAL MEETING

The Special Meeting will be held on [·], 2007, at [·], local time, to consider the following items of business:

Proposal One

Approval of the Issuance of up to 60,561,515 shares of Nasdaq Common Stock

Nasdaq is seeking the approval of holders of Nasdaq Voting Securities for the issuance of up to 60,561,515 shares of Nasdaq Common Stock in the Offer as described in this Proxy Statement/Prospectus, as required by The NASDAQ Stock Market Marketplace Rule 4350(i)(1)(D)(ii).

Pursuant to the Voting Agreements, holders of an aggregate of [·] votes attributable to Nasdaq Voting Securities (including Nasdaq’s Chief Executive Officer) as of the Record Date, representing approximately [·]% of Nasdaq’s voting power as of the Record Date, have agreed to vote their shares “for” the Share Issuance. Pursuant to Nasdaq’s governing documents, Nasdaq’s Board of Directors has approved the submission of an application to the S.E.C. seeking to allow up to 12% of Nasdaq’s voting power owned by the Voting Agreement Parties to be voted in accordance with the Voting Agreements. The Voting Agreements will not be legally effective until the time, if any, as such approval is granted.

NASDAQ Requirements

The NASDAQ Stock Market rules require the approval of holders of Nasdaq Voting Securities prior to the issuance of additional shares of Nasdaq Common Stock in any transaction if:

 

  1. the common stock has, or will have upon issuance, voting power equal to or in excess of 20% of the voting power outstanding before the issuance of such stock or of securities convertible into or exercisable for common stock; or

 

  2. the number of shares of common stock to be issued is, or will be upon issuance, equal to or in excess of 20% of the number of shares of common stock outstanding before the issuance of the common stock or of securities convertible into or exercisable for common stock.

As of the Record Date, there were [ ·] shares of Nasdaq Common Stock outstanding and [·] shares reserved or issued for options. If we were to acquire 100% of the outstanding OMX Shares, it is currently estimated that up to 60,561,515 shares of Nasdaq Common Stock would be issued, representing an increase of up to [·]% over the number of outstanding shares of Nasdaq Common Stock as of the Record Date. The issuance of the shares of Nasdaq Common Stock will allow us to conduct and complete the Offer discussed in this Proxy Statement/Prospectus.

Impact of Issuance on Existing Shareholders

Nasdaq’s existing common shareholders will have rights which are equal to those of the holders of the newly-issued Nasdaq Common Stock. In determining whether to vote for this proposal, shareholders should consider that they are subject to the risk of substantial dilution of their interests which will result from the issuance of shares of Nasdaq Common Stock, and that as a result of the issuance of such Nasdaq Common Stock, the current shareholders will own a smaller percentage of the outstanding Nasdaq Common Stock. Immediately following the completion of the Offer with OMX, assuming that all outstanding OMX Shares are tendered into the Offer, we estimate that OMX shareholders will hold approximately 28% of Nasdaq Common Stock outstanding after the Offer calculated on a fully diluted basis using the treasury method.

Recommendation of Nasdaq’s Board of Directors

Nasdaq cannot complete the Offer unless the Share Issuance is approved by the required vote. Nasdaq’s Board of Directors recommends a vote “for” approval of Proposal One, the Share Issuance.

 

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Proposal Two

Approval of an Amendment to Nasdaq’s Restated Certificate of Incorporation to Change

Nasdaq’s Name to “The NASDAQ OMX Group, Inc.”

Nasdaq’s Restated Certificate of Incorporation currently provides that Nasdaq’s name is “The Nasdaq Stock Market, Inc.” As part of our agreement with OMX, we have committed to seeking the approval of our shareholders to change the name of the combined company to “The NASDAQ OMX Group, Inc.” upon completion of the Offer. We believe this name better reflects the expanded global reach of the combined company and best leverages the significant brand equity in the Nasdaq and OMX names. If holders of Nasdaq Voting Securities approve this proposal, Article First of Nasdaq’s Restated Certificate of Incorporation would be amended to read in its entirety as follows:

“The name of the corporation is The NASDAQ OMX Group, Inc.”

If holders of Nasdaq Voting Securities do not approve this proposal, Nasdaq will not be prevented from completing the Offer as described in this Proxy Statement/Prospectus. As part of our agreement with OMX, however, if this proposal is not approved, we must take such actions as reasonably requested by OMX to ensure that after the closing of the Offer, Nasdaq trades under the name “NASDAQ OMX Group.” If holders of Nasdaq Voting Securities approve this proposal, we intend to file an amendment to our Restated Certificate of Incorporation reflecting the name change with the Secretary of State of the State of Delaware as promptly as practicable following completion of the Offer.

Pursuant to the Voting Agreements, holders of an aggregate of [·] votes attributable to Nasdaq Voting Securities (including Nasdaq’s Chief Executive Officer) as of the Record Date, representing approximately [·]% of Nasdaq’s voting power as of the Record Date, have agreed to vote their shares “for” the Charter Amendment. Pursuant to Nasdaq’s governing documents, Nasdaq’s Board of Directors has approved the submission of an application to the S.E.C. seeking to allow up to 12% of Nasdaq’s voting power owned by the Voting Agreement Parties to be voted in accordance with the Voting Agreements. The Voting Agreements will not be legally effective until the time, if any, as such approval is granted.

Recommendation of Nasdaq’s Board of Directors

At a meeting held on May 24, 2007, Nasdaq’s Board of Directors adopted a resolution setting forth the proposed name change and declaring it advisable. Nasdaq’s Board of Directors recommends a vote “for” Proposal Two, the Charter Amendment.

 

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THE OFFER

To effect the proposed combination of Nasdaq and OMX, Nasdaq is offering consideration equivalent to 0.502 of a newly issued share of Nasdaq Common Stock plus SEK 94.3 for each OMX Share outstanding. See the section entitled “Terms of the Offer” on page 87.

Assuming that all outstanding OMX Shares are tendered into the Offer, Nasdaq currently estimates that approximately 60,561,515 shares of Nasdaq Common Stock will be issued to OMX shareholders and approximately $1,665,673,166 in cash will be paid. The issuance of shares of Nasdaq Common Stock is subject to approval by holders of Nasdaq Voting Securities at the Special Meeting.

Based on the closing price of Nasdaq Common Stock on The NASDAQ Stock Market on [·], 2007, the last practicable day before the date of this Proxy Statement/Prospectus, of $[·] and an exchange rate of SEK [· ] to $1.00 on [·], 2007, the Offer corresponds to a value of approximately SEK [·] for each OMX Share tendered. The Offer represents:

 

   

A premium of 19% over SEK 174.5, the closing price of OMX Shares on May 23, 2007, the last full trading day prior to the announcement of the Offer, and a SEK/USD exchange rate of 6.83 to 1 on May 23, 2007; and

 

   

A premium of 25% over the volume weighted average price of SEK 165.9 per OMX Share over the 20 trading days up to and including May 23, 2007, the last full trading day prior to the announcement of the Offer.

The complete terms and conditions for the Offer are set forth on pages 87 through 89.

The Board of Directors of OMX has unanimously recommended that holders of OMX Shares accept the Offer. As a result of the Offer, assuming acceptance by all holders of OMX Shares, holders of OMX Shares will hold approximately 28% of the combined company, calculated on a fully diluted basis using the treasury method.

Nasdaq does not own or control, and during the six-month period immediately preceding the announcement of the Offer, has not acquired ownership or control of any OMX Shares or other securities entitling it to acquire OMX Shares. See the description of the Irrevocable Undertakings under “The Offer—Principal Agreements” on page 82 for a description of the Irrevocable Undertakings.

Background of the Offer

Nasdaq’s Board of Directors and OMX’s Board of Directors continually review their respective companies’ results of operations and competitive positions in the industries in which they operate, as well as their strategic alternatives. In connection with these reviews, each of Nasdaq and OMX from time to time has evaluated potential transactions that would further its strategic objectives. In addition, OMX regularly has contact with other exchange companies to discuss areas of possible collaboration, including strategic transactions. In connection with these reviews and discussions, OMX has regularly engaged Credit Suisse since 2002 to act as its financial advisor with respect to evaluating possible strategic transactions.

On August 1 and 2, 2006, members of management of Nasdaq and OMX met in person in New York for a general introduction. Similar meetings were held on September 21 and 22, 2006 in Amsterdam.

On October 20, 2006, Robert Greifeld met with members of OMX’s Board of Directors and management for a general introduction and discussion regarding Nasdaq’s business, and in December 2006, Magnus Böcker met with members of Nasdaq’s Board of Directors for a general introduction and discussion regarding OMX’s business.

 

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During February, March and April 2007, representatives of Nasdaq and OMX, as well as JPMorgan, Morgan Stanley (which had been engaged by OMX in March 2007 as co-financial advisor with Credit Suisse in connection with a potential combination of Nasdaq and OMX) and Credit Suisse, had ongoing discussions regarding a potential combination of Nasdaq and OMX.

On March 23, 2007, Nasdaq’s Board of Directors met and was presented with an update regarding discussions between Nasdaq and OMX, including a discussion of the financial and strategic effects of a potential combination of OMX with Nasdaq.

On April 12 and April 23, 2007, OMX’s Board of Directors was presented with an update on the discussions between Nasdaq and OMX, including a discussion of the financial and strategic effects of a potential combination of OMX with Nasdaq.

On April 18, 2007, Nasdaq’s Board of Directors met and was presented with an update regarding discussions between Nasdaq and OMX.

On April 19, 2007, representatives of JPMorgan, Nasdaq, Hellman & Friedman LLC and Silver Lake Partners met to discuss a possible combination of Nasdaq with OMX.

On April 24, 2007, representatives of Nasdaq, Hellman & Friedman LLC and Silver Lake Partners met to discuss a possible combination of Nasdaq with OMX.

On April 26, 2007, Robert Greifeld and Magnus Böcker conducted in-person discussions in Amsterdam regarding the proposed transaction.

On April 28, 2007, representatives of Nasdaq and OMX, including representatives of JPMorgan and Morgan Stanley, discussed a potential transaction, including potential terms, documentation and timing. Over the next two weeks, the parties discussed various terms of the proposed transaction and exchanged term sheets regarding a proposed combination of Nasdaq and OMX, and engaged in due diligence.

On May 3, 2007, representatives of JPMorgan, Nasdaq, Hellman & Friedman LLC and Silver Lake Partners met to discuss a possible combination of Nasdaq with OMX.

On May 7 and May 13, 2007, Nasdaq’s Board of Directors met and was presented with an update regarding discussions between Nasdaq and OMX.

On May 16, 2007, Nasdaq’s legal counsel distributed a draft of the Transaction Agreement to OMX. From May 16 to May 24, 2007, OMX and Nasdaq, together with their financial and legal advisors, negotiated the terms of the Transaction Agreement and press release announcing the Offer.

On May 17 and May 18, 2007, Robert Greifeld and Magnus Böcker conducted in-person discussions in New York regarding the proposed transaction. Significant progress on open issues between the parties was made during these discussions, and, as a result, the parties decided to pursue definitive documentation with respect to a combination of Nasdaq and OMX in parallel with continued discussions.

In the second and third weeks of May, 2007, the Voting Agreement Parties were made aware that OMX desired that they enter into voting agreements in connection with any announcement of the Offer. During this time period, there were informal discussions among OMX, the Voting Agreement Parties and Nasdaq regarding these potential voting agreements. From May 22 to May 24, 2007, OMX and the Voting Agreement Parties negotiated the terms of the proposed voting agreements.

In the second and third weeks of May, 2007, the Irrevocable Undertakings Parties were made aware that Nasdaq desired that they enter into irrevocable undertakings in connection with any announcement of the Offer. During this time period, there were informal discussions among Nasdaq, the Irrevocable Undertakings Parties and OMX regarding these potential irrevocable undertakings. From May 19 to May 24, 2007, Nasdaq and the Irrevocable Undertakings Parties negotiated the terms of the proposed Irrevocable Undertakings.

On May 23, 2007, members of Nasdaq’s management, along with their financial and legal advisors, traveled to Stockholm, Sweden to continue discussions with OMX’s management and their financial and legal advisors relating to a possible transaction. Also on May 23, 2007, Nasdaq’s Board of Directors met and was presented with an update regarding discussions between Nasdaq and OMX.

 

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On May 24, 2007, Nasdaq’s Board of Directors met and was presented with the Transaction Agreement and Irrevocable Undertakings for approval. At that meeting, Nasdaq’s management gave a presentation to Nasdaq’s Board of Directors regarding the Offer and related matters and JPMorgan reviewed with Nasdaq’s Board of Directors its financial analysis of the Offer. JPMorgan also delivered its oral opinion, subsequently confirmed in writing, that, as of May 24, 2007, and based upon and subject to the factors and assumptions stated in its opinion, the consideration to be paid by Nasdaq in the Offer was fair, from a financial point of view, to Nasdaq. At that meeting, Nasdaq’s Board of Directors unanimously approved the Transaction Agreement and the Irrevocable Undertakings and resolved to:

 

   

approve the Offer upon the terms and subject to the conditions in the press release announcing the Offer;

 

   

recommend that holders of Nasdaq Voting Securities vote in favor of the Share Issuance and the Charter Amendment;

 

   

authorize the public announcement of the recommendation of Nasdaq’s Board of Directors in the press release announcing the Offer; and

 

   

approve the submission of an application to the S.E.C. seeking to allow up to 12% of Nasdaq’s voting power owned by the Voting Agreement Parties to be voted in accordance with the Voting Agreements.

On May 24, 2007, OMX’s Board of Directors met and considered the Transaction Agreement and Voting Agreements for approval. At that meeting, the management of OMX and its legal and financial advisors made presentations regarding various aspects of the proposed Offer, including the financial and strategic effects of a potential combination of OMX with Nasdaq. Each of Morgan Stanley and Credit Suisse reviewed the financial analyses performed by each of them in connection with their evaluation of the consideration to be received by the holders of OMX Shares pursuant to the Offer. Each of Morgan Stanley and Credit Suisse also rendered an oral opinion, subsequently confirmed in writing, to the effect that, as of May 24, 2007, and based upon and subject to the matters stated in their respective opinions, the consideration to be received by the holders of OMX Shares pursuant to the Offer was fair, from a financial point of view, to such holders. At that meeting, OMX’s Board of Directors unanimously approved the Transaction Agreement and the Voting Agreements and resolved to recommend that holders of OMX Shares accept the Offer.

On May 25, 2007, Nasdaq and OMX executed the Transaction Agreement and the Irrevocable Undertakings and the Voting Agreements were executed. Shortly thereafter, Nasdaq and OMX issued a joint press release announcing the Offer and the recommendation of the combination by OMX’s Board of Directors and Nasdaq’s Board of Directors. On June 5, 2007, OMX issued an additional press release confirming that OMX’s Board of Directors unanimously recommended that OMX shareholders accept the Offer.

Nasdaq’s and OMX’s Reasons for the Offer

On May 24, 2007, Nasdaq’s Board of Directors approved the Transaction Agreement, the Irrevocable Undertakings and the making of the Offer. Nasdaq’s Board of Directors recommends that holders of Nasdaq Voting Securities vote for the Share Issuance and the Charter Amendment at the Special Meeting.

On May 24, 2007, OMX’s Board of Directors approved the Transaction Agreement and the Voting Agreements and recommended that OMX shareholders accept the Offer.

In reaching these decisions, the Board of Directors of each company consulted with its management and its financial and legal advisors and considered a variety of factors, including the material factors described below. In light of the number and wide variety of factors considered in connection with its evaluation of the transaction, neither Board of Directors considered it practicable to, and did not attempt to, quantify or otherwise assign relative weights to the specific factors that it considered in reaching its determination. Each Board of Directors viewed its position as being based on all of the information available and the factors presented to and considered by it. In addition, individual directors may have given different weight to different factors. This explanation of

 

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each company’s reasons for the proposed combination and all other information presented in this section is forward-looking in nature and, therefore, should be read in light of the factors discussed under “Forward-Looking Statements.”

The factors described in this section, in “Recommendation of Nasdaq’s Board of Directors” and in “Recommendation of OMX’s Board of Directors” were all of the material factors generally supporting each Board of Directors’ decision to approve the Transaction Agreement and to make the Offer, in the case of Nasdaq’s Board of Directors, or to recommend that OMX shareholders accept the Offer, in the case of OMX’s Board of Directors. The factors included those set forth below, which were the factors set out in the joint press announcement of Nasdaq and OMX that was released on May 25, 2007 in connection with the announcement of the Offer.

 

   

That the combined company would create the premier global exchange company with an average daily trading volume of 7.4 million trades, representing a value of approximately $61 billion, and with approximately 4,000 listed companies from 39 countries with an aggregate market capitalization of approximately $5.5 trillion;

 

   

That the combined company would have many of the world’s largest companies listed on its marketplaces, with a leading market share of listings in the technology, software, telecommunication and pulp and paper industries worldwide, and that issuers listing with the combined company would be associated with an innovative, future-focused global exchange company with blue-chip peers in all industry sectors and would have access to a broad base of investors and deep pools of liquidity;

 

   

That the combined company’s liquidity pools, advanced speed of execution and integrated cross-border trading capabilities would provide issuers with increased visibility and access to global equity capital;

 

   

That the combined company would be the world-leading provider of exchange technology, since:

 

   

OMX has been a pioneer in creating a truly integrated cross-border stock market and also has created a world-renowned technology customer base of equity, debt and derivatives exchanges with its systems being used by over 60 marketplaces in more than 50 countries worldwide, including Hong Kong, Singapore, Australia and the U.S.; and

 

   

Nasdaq pioneered electronic trading and has continued to innovate over the last thirty years and now has the fastest, most efficient trading platform in the U.S.;

 

   

That, together, Nasdaq and OMX would provide the technology for the world’s increasingly competitive and demanding capital markets;

 

   

That OMX’s extensive experience and expertise in providing state-of-the-art exchange technology worldwide to a sophisticated and global customer base, matched with Nasdaq’s technology excellence and global brand and advanced services and support for innovative growth companies, provides a powerful opportunity to grow and enhance the combined technology business;

 

   

That the focus of the combined company on technology leadership and the combination of Nasdaq’s and OMX’s expertise and brands would generate growth opportunities and additional sales of technology and related services globally;

 

   

That the combined company would provide a highly competitive derivatives market considering:

 

   

the Nordic Exchange is Europe’s third largest marketplace for trading and clearing equity-related derivatives with an annual trading volume of approximately 140 million equity related derivatives contracts;

 

   

OMX’s Nordic distribution network is extended through an international network of links to cooperating exchanges and clearinghouses; and

 

   

OMX’s technology solutions are also being used by other leading derivatives exchanges around the world and would be a key asset in the combined company’s opportunities to capture the high growth in derivatives trading globally;

 

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That the combined company would feature an enhanced data business with richer content and improved global distribution;

 

   

That the combined company would leverage the strength of each organization’s distribution capabilities to broaden the customer base for Nasdaq’s and OMX’s existing data products and to provide enhanced data tailored with value-added services to market participants;

 

   

That through Nasdaq’s distribution network of over 250 data vendors and OMX’s over 100 data vendors, the combined company would be able to enhance its global market transparency;

 

   

That the market data generated by the combined company would lever its product expertise and develop innovative data products and combined indices incorporating global complementary Nasdaq and OMX stocks and derivatives;

 

   

That the combined company would have enhanced strategic opportunities, including that:

 

   

the combined company would be the partner of choice for future cooperation and consolidation opportunities with increased financial and managerial resources;

 

   

the combined company would be well positioned to drive organic growth and to continue to take a proactive role in sector consolidation in Europe, emerging markets, the Americas and Asia; and

 

   

both Nasdaq and OMX would benefit from increased geographic, product and sector diversification and each would benefit from the other’s strategic holdings in the industry;

 

   

That the combined company would have significant synergy potential given that the completion of the Offer is anticipated to create substantial value for shareholders, with total pre-tax annual synergies estimated at $150 million (of which $100 million constitutes estimated cost synergies and $50 million estimated revenue synergies);

 

   

That cost synergies would be realized through the rationalization of IT systems and data centers, rationalization of non-IT functions, and reduced capital and procurement expenditure;

 

   

That revenue synergies would be achieved through the creation of deeper liquidity pools, increased cross-border trading, increased international listings, packaged data products and enhanced technology sales;

 

   

That investors and members would benefit from deeper pools of liquidity and higher trading volumes, a common IT infrastructure and interface for both exchange companies, access to more products and positive portfolio diversification;

 

   

That issuers would benefit from increased visibility and direct access to the largest investor base in the world, and increased trading activity and liquidity is also expected to reduce the cost of capital for issuers;

 

   

That technology customers would continue to benefit from the market insight the combined company derives from its direct participation in capital markets, and combined expertise would accelerate the development of the next generation of exchange technology at a time when investors and members are increasingly demanding multi-asset class trading platforms;

 

   

That data providers and vendors would receive richer content and improved global distribution and the market data would allow the combined company to leverage its product expertise and develop a range of combined indices incorporating complementary stocks and derivatives from existing indices; and

 

   

That employees of both Nasdaq and OMX would have enhanced career opportunities as employees of the combined company given the combined company’s strategy to grow volume and broaden its customer base.

 

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In addition to the foregoing factors, Nasdaq’s Board of Directors also considered the following material factors in connection with its decision to approve the Transaction Agreement and to make the Offer:

 

   

The opinion of JPMorgan that, as of May 24, 2007, and based upon and subject to the factors and assumptions stated in its opinion, the consideration to be paid by Nasdaq in the Offer is fair, from a financial point of view, to Nasdaq, which opinion addresses the fairness of the consideration to be offered by Nasdaq in the Offer only as it relates to Nasdaq and does not address the underlying decision by Nasdaq to make the Offer or constitute a recommendation to the shareholders of Nasdaq or the shareholders of OMX with respect to the Offer, including how to vote with respect thereto (such opinion is described under “Opinion of J.P. Morgan Securities Inc.—Financial Advisor to Nasdaq” beginning on page 55 and is set forth in its entirety on Annex D);

 

   

The structure of the Offer, the terms of the transaction, the dilution effects on common shareholders of Nasdaq, the Irrevocable Undertakings, the Voting Agreements, the non-solicitation provisions of the Transaction Agreement and expected capital structure of the combined company; and

 

   

The historical and current market prices of Nasdaq Common Stock and OMX Shares, which provided a baseline for Nasdaq’s Board of Directors to evaluate whether the value to be paid in connection with the Offer was reasonable in light of Nasdaq’s Board of Directors judgment of the potential benefits from the completion of the Offer.

In addition to the foregoing factors, OMX’s Board of Directors also considered the written opinion of each of Morgan Stanley and Credit Suisse to the effect that, as of May 24, 2007 and based upon the factors and subject to the assumptions set forth in its written opinion, the consideration to be received by the holders of OMX Shares pursuant to the Offer was fair, from a financial point of view, to such shareholders and the factors described below under “Recommendation of OMX’s Board of Directors.”

There can be no assurance that the potential synergies or opportunities considered by either party’s Board of Directors will be achieved through completion of the transaction. See the section entitled “Risk Factors” on page 21.

Recommendation of Nasdaq’s Board of Directors

Nasdaq’s Board of Directors believes that the Offer is advisable, fair to and in the best interests of Nasdaq and holders of Nasdaq Voting Securities and recommends that holders of Nasdaq Voting Securities vote “for” the Share Issuance and the Charter Amendment.

In connection with its deliberations, Nasdaq’s Board of Directors considered certain potential risks associated with the Offer and the business of Nasdaq, OMX and the combined company described in the section entitled “Risk Factors” on page 21, as well as the following additional potential risks associated with the Offer:

 

   

The risks and costs to Nasdaq if the Offer is not completed, including the potential diversion of management and employee attention, potential employee attrition and the potential effect on business and customer relationships;

 

   

The risk that holders of Nasdaq Voting Securities may fail to approve the Share Issuance or that an insufficient number of OMX shareholders would tender their OMX Shares into the Offer;

 

   

The fees and expenses associated with completing the Offer; and

 

   

The potential impact of the non-solicitation provisions of the Transaction Agreement on Nasdaq.

 

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Recommendation of OMX’s Board of Directors

OMX’s Board of Directors unanimously recommends that OMX shareholders accept the Offer. OMX issued a press announcement on June 5, 2007 that contained the recommendation of its Board of Directors with respect to the Offer. The full text of the press announcement is as follows:

OMX’s Board of Directors unanimously recommends the public offer from NASDAQ

Statement of the Board of Directors of OMX AB (publ) in relation to the public offer from The NASDAQ Stock Market, Inc.

Background

This statement is issued by the Board of Directors of OMX AB (publ) (“OMX”) pursuant to II.14 of the Stockholm Stock Exchange Takeover Rules.

On 25 May 2007, The NASDAQ Stock Market, Inc. (“NASDAQ”) announced a recommended offer to the shareholders in OMX to be effected through a cash and share tender offer by NASDAQ for all outstanding shares in OMX (the “Offer”). As set forth in the joint press release announcing the Offer released by OMX and NASDAQ on 25 May 2007, the Board of Directors of OMX has unanimously resolved to recommend the OMX shareholders to accept the Offer. The below full statement reflects the Board’s considerations in connection with making its recommendation.

The consideration offered is equivalent to 0.502 new NASDAQ shares plus SEK 94.3 in cash for each OMX share (the “Offer Consideration”). Based on NASDAQ’s closing price on 23 May 2007 of USD 33.19, the last full trading day prior to the announcement of the Offer, and a SEK/USD exchange rate of 6.83, the Offer values OMX at SEK 208.1 per share, equivalent to SEK 25.1 billion, and represents a premium of 19 per cent to the closing price of SEK 174.5 per OMX share on 23 May 2007, the last full trading day prior to the announcement of the Offer, and a premium of 25 per cent to the volume weighted average price of SEK 165.9 per OMX share over the 20 trading days up to and including 23 May 2007.

Investor AB, Nordea Bank AB and Magnus Böcker, Chief Executive Officer of OMX, holding in aggregate approximately 16.6 per cent of all the outstanding shares and votes in OMX, have irrevocably undertaken, subject to certain conditions, to tender all their OMX shares in the Offer.

For more details on the Offer and related issues we refer to the joint press release announcing the Offer released by OMX and NASDAQ on 25 May 2007.

At NASDAQ’s request, the Board of Directors of OMX has permitted NASDAQ to perform limited due diligence prior to the announcement of the Offer, since the Board of Directors judged that a public offer from NASDAQ would be of interest for OMX shareholders to assess. Equally OMX has also performed similar limited due diligence on NASDAQ.

Board of Directors’ recommendation

Over the past years, OMX has improved its performance significantly, both strategically, operationally and financially, been in the forefront of industry cross border consolidation and recorded the highest profit in history in 2006. Despite the strong historical performance, OMX faces several operational and strategic challenges for growth and profitability going forward, including changing regulatory environment, intensifying competition, rapid pace of consolidation within the industry, etc. In this context, the Board of Directors of OMX has evaluated several potential strategic alternatives, including a stand-alone alternative with continued focus on developing the Nordic markets and technology business, and come to the conclusion that the proposed combination with NASDAQ is the strongest available option.

 

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The combined company, to be called The NASDAQ OMX Group, combines two highly complementary businesses, uniting NASDAQ’s leading global brand and highly efficient electronic trading platform with OMX’s global technology services platform and customer base, efficient Nordic Exchange and derivatives capabilities. The combination will provide significant benefits for customers, shareholders and other stakeholders in both companies. It will also strengthen the Nordic region as a financial center. The combined group’s strategy will be to grow volume and broaden its customer base, combining the strengths of both companies. In this context, the proposed transaction will create enhanced career opportunities for employees of the combined group. The Board of Directors currently does not foresee any significant staff reductions as a consequence of the combination.

The NASDAQ OMX Group will be the largest global network of exchanges and exchange customers linked by technology and will be well positioned to drive organic growth and to continue to take a proactive role in the sector consolidation. The combined group will have pro forma 2006 revenues of SEK 8.3 billion (USD 1.2 billion)(1) and 2,349 employees in 22 countries.

Both OMX and NASDAQ believe the combination will create substantial value for shareholders, with total pre-tax annual synergies estimated at SEK 1 billion (USD 150 million), of which SEK approximately 670 million (USD 100 million) constitutes estimated cost synergies and SEK 330 million (USD 50 million) estimated revenue synergies. The combination is expected to be accretive to earnings per share in 2009.

Accordingly, the Board of Directors’ recommendation is based on factors that the Board of Directors considers relevant for the Offer, including but not limited to the evaluation of OMX’s and NASDAQ’s current and estimated future development of business operations and financial results, estimated synergies, OMX’s market position in the rapidly changing and consolidating exchange industry, and other strategic alternatives available to OMX. The Board’s views in the aforesaid respects are further reflected in the joint press release released by OMX and NASDAQ on 25 May 2007.

OMX’s Board of Directors has been advised by financial and other advisers in connection with the Offer and the Board’s assessment thereof. The Board of Directors’ financial advisers are Morgan Stanley, Lenner & Partners Corporate Finance AB and Credit Suisse. The Board of Director’s legal advisers are Advokatfirman Vinge KB and Cleary Gottlieb Steen & Hamilton LLP.

Based on the above the OMX Board of Directors unanimously recommends that OMX’s shareholders accept the Offer.(2)

This statement shall be governed by and construed in accordance with the laws of Sweden. Any dispute, controversy or claim arising out of, or in connection with, this statement shall exclusively be settled by the Swedish courts.

Stockholm, 4 June 2007

Board of Directors

OMX AB (publ)

In connection with its deliberations, OMX’s Board of Directors considered certain potential risks associated with the Offer and the business of Nasdaq, OMX and the combined company described in the section entitled “Risk Factors” on page 21.

 


1 Subsequently it was determined that pro forma revenues for the year ended December 31, 2006 would amount to $2.14 billion. See “Unaudited Pro Forma Condensed Combined Financial Data of the Combined Company” on page 170.
2 OMX board members Lars Wedenborn, who is also Chief Financial Officer of Investor AB, and Markku Pohjola, who is also Deputy Group CEO and Head of Group Processing and Technology of Nordea Bank AB, participated in the Board's resolution.

 

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Opinion of J.P. Morgan Securities Inc.—Financial Advisor to Nasdaq

Pursuant to an engagement letter dated May 23, 2007, Nasdaq retained JPMorgan as its financial advisor in connection with the Offer and to deliver a fairness opinion in connection with the Offer.

At a meeting of Nasdaq’s Board of Directors on May 24, 2007, JPMorgan rendered its oral opinion to Nasdaq’s Board of Directors that, as of that date and based upon and subject to the factors and assumptions set forth in its opinion, the consideration to be paid by Nasdaq in the Offer was fair, from a financial point of view, to Nasdaq. JPMorgan confirmed its oral opinion by delivering to Nasdaq’s Board of Directors a written opinion dated May 24, 2007. Nasdaq’s Board of Directors did not limit the investigations made or the procedures followed by JPMorgan in giving its oral or written opinion.

The full text of the written opinion of JPMorgan, which sets forth, among other things, the assumptions made, procedures followed, matters considered and limitations on the review undertaken by JPMorgan in connection with its opinion, is attached to this Proxy Statement/Prospectus as Annex D and is incorporated in this Proxy Statement/Prospectus by reference. Holders of Nasdaq Voting Securities should read this opinion carefully and in its entirety.

JPMorgan provided its advisory services and opinion for the information and assistance of Nasdaq’s Board of Directors in connection with its consideration of the Offer. Neither its opinion nor the related analyses constituted a recommendation of the Offer to Nasdaq’s Board of Directors. The description of the JPMorgan opinion is qualified in its entirety by reference to the full text of the opinion set forth in Annex D.

JPMorgan’s opinion is directed to the Board of Directors of Nasdaq and addresses only the fairness, from a financial point of view, to Nasdaq of the consideration to be paid in connection with the Offer and does not address the underlying decision by Nasdaq to make the Offer. Moreover, JPMorgan has expressed no opinion as to the price at which Nasdaq Common Stock or OMX Shares will trade at any future time. JPMorgan was not asked to, and did not, recommend the specific consideration payable in the Offer, which consideration was determined through negotiations between Nasdaq and OMX. The JPMorgan opinion is not a recommendation as to how any holder of Nasdaq Voting Securities should vote with respect to the Offer or any other matter. JPMorgan’s opinion was one of many factors taken into consideration by Nasdaq’s Board of Directors in making its determination to approve the Offer. Consequently, JPMorgan’s analyses described below should not be viewed as determinative of the decision of Nasdaq’s Board of Directors with respect to the fairness from a financial point of view of the consideration to be paid by Nasdaq in the Offer.

In arriving at its opinion, JPMorgan, among other things:

 

   

reviewed a draft dated May 23, 2007 of the Transaction Agreement;

 

   

reviewed a draft dated May 23, 2007 of the press release contemplated by the Transaction Agreement announcing the Offer;

 

   

reviewed certain publicly available business and financial information concerning OMX and Nasdaq and the industries in which they operate;

 

   

compared the proposed financial terms of the Offer with the publicly available financial terms of certain transactions involving companies that JPMorgan deemed relevant and the consideration received for such companies;

 

   

compared the financial and operating performance of OMX and Nasdaq with publicly available information concerning certain other companies that JPMorgan deemed relevant and reviewed the current and historical market prices of OMX Shares and Nasdaq Common Stock and certain publicly traded securities of such other companies;

 

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reviewed certain internal financial analyses and forecasts prepared by the managements of OMX and Nasdaq relating to the estimated amount and timing of the cost savings and related expense and revenue and other synergies expected to result from the Offer, which we refer to in this section as the Synergies, and compared the Synergies with publicly available information regarding cost savings and related expense and revenue and other synergies expected to be received in transactions involving companies JPMorgan deemed relevant;

 

   

reviewed with the managements of Nasdaq and OMX certain publicly available research analysts’ financial forecasts and estimates of the future performance of OMX and Nasdaq and financial data extrapolated from such forecasts and estimates as directed by managements of Nasdaq and OMX; and

 

   

performed such other financial studies and analyses, and took into account such other information and matters as JPMorgan deemed appropriate for the purposes of its opinion.

JPMorgan also held discussions with certain members of the managements of OMX and Nasdaq with respect to certain aspects of the Offer, and the past and current business operations of OMX and Nasdaq, the financial condition and future prospects and operations of OMX and Nasdaq, the effects of the Offer on the financial condition and future prospects of Nasdaq and OMX, and certain other matters that JPMorgan believed necessary or appropriate to its inquiry.

JPMorgan relied upon and assumed, without assuming responsibility or liability for independent verification, the accuracy and completeness of all information that was publicly available or was furnished to or discussed with it by OMX and Nasdaq or otherwise reviewed by or for JPMorgan. JPMorgan did not conduct, nor was it provided with, any valuation or appraisal of any assets or liabilities, nor did it evaluate the solvency of OMX or Nasdaq under any state or federal laws relating to bankruptcy, insolvency or similar matters. In connection with its analyses, JPMorgan was directed by the managements of OMX and Nasdaq to utilize the publicly available research analysts’ financial forecasts and estimates and the extrapolated financial forecasts and estimates referred to above relating to OMX and Nasdaq. In relying on such publicly available research analysts’ financial forecasts and estimates and the extrapolated financial forecasts and estimates, JPMorgan was advised by the managements of OMX and Nasdaq, and JPMorgan assumed, at Nasdaq’s direction, that they were a reasonable basis on which to evaluate the expected future results of operations and financial condition of OMX and Nasdaq. In relying on internal analyses and forecasts relating to the Synergies, JPMorgan assumed that the Synergies were reasonably prepared based on assumptions reflecting the best currently available estimates and judgments by OMX and Nasdaq management. JPMorgan expressed no view as to the foregoing analyses or forecasts (including the Synergies) or the assumptions on which they were based and assumed that they would be achieved at the times and in the amounts projected. JPMorgan also assumed that:

 

   

any cash consideration required to be paid to holders of OMX Shares who do not participate in the Offer would not change the mix or amount of the consideration in the Offer in any respect material to JPMorgan’s analysis;

 

   

no additional stock or other equity securities of OMX would be issued after the date of JPMorgan’s opinion and that the only OMX Shares that would be purchased pursuant to the Offer would be the OMX Shares outstanding as of the date of JPMorgan’s opinion as specified in clause (A) of the recitals to the Transaction Agreement;

 

   

the Offer would have the tax consequences described in discussions with, and materials furnished to JPMorgan by, representatives of Nasdaq;

 

   

the transactions contemplated by the Transaction Agreement would be consummated as described in the Transaction Agreement, without any waiver of any of the conditions thereof (including those in the press release announcing the Offer); and

 

   

that the definitive Transaction Agreement and the definitive press release announcing the Offer would not differ in any material respects from the drafts thereof furnished to JPMorgan. JPMorgan relied as to all legal matters relevant to rendering its opinion upon the advice of counsel. JPMorgan further

 

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assumed that all material governmental, regulatory or other consents and approvals necessary for the consummation of the Offer will be obtained without any adverse effect on OMX or Nasdaq or on the contemplated benefits of the Offer.

JPMorgan based its opinions on economic, market and other conditions as in effect on, and the information made available to JPMorgan as of, the date of its opinion. Subsequent developments may affect its opinion, and JPMorgan has no obligation to update, revise or reaffirm its opinion.

In accordance with customary investment banking practice, JPMorgan employed generally accepted valuation methods in reaching its opinion. The following is a summary of the material financial analyses that, JPMorgan used in providing its opinion and does not purport to be a complete description of the analyses underlying JPMorgan’s opinion or the presentations made by JPMorgan to Nasdaq’s Board of Directors. Some of the summaries of financial analyses are presented in tabular format. In order to understand the financial analyses used by JPMorgan more fully, you should read the tables together with the text of each summary. The tables alone do not constitute a complete description of JPMorgan’s financial analyses, including the methodologies and assumptions underlying the analyses, and if viewed in isolation could create a misleading or incomplete view of the financial analyses performed by JPMorgan.

Trading Comparables Analysis

JPMorgan compared selected financial and market data of OMX and Nasdaq with similar data for the following companies:

European Exchanges

 

   

Deutsche Börse AG;

 

   

the LSE;

 

   

Bolsas y Mercados Españoles, Sociedad Holding De Mercados y Sistemas Financieros, S.A.;

 

   

Hellenic Exchanges S.A.;

 

   

Oslo Børs Holding ASA; and

 

   

Imarex Nos ASA.

North American Exchanges

 

   

NYSE Euronext;

 

   

The Chicago Mercantile Exchange Holdings Inc.;

 

   

NYMEX Holdings, Inc.;

 

   

CBOT Holdings, Inc.;

 

   

IntercontinentalExchange, Inc.;

 

   

TSX Group Inc.; and

 

   

International Securities Exchange Holdings, Inc.

Australian/Asian/African Exchanges

 

   

ASX Limited

 

   

Hong Kong Exchanges and Clearing Limited;

 

   

Singapore Exchange Limited;

 

   

Bursa Malaysia Berhad; and

 

   

JSE Limited.

 

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JPMorgan calculated and compared various financial multiples and ratios based on publicly available financial data, information it obtained from filings with the S.E.C., information it obtained from Datastream, research analyst reports and I/B/E/S estimates, each as of May 21, 2007. With respect to the selected companies, JPMorgan presented:

 

   

price;

 

   

market capitalization;

 

   

firm value;

 

   

estimated 2007 and 2008 firm value to EBITDA ratio;

 

   

estimated 2007 and 2008 price to earnings ratio;

 

   

estimated 2007 and 2008 EBITDA margin;

 

   

estimated 2007 and 2008 EBITDA growth rate;

 

   

estimated 2007 and 2008 dividend yield; and

 

   

estimated 2007 and 2008 PEG ratio.

EBITDA means earnings before interest, taxes, depreciation and amortization. A PEG ratio is the ratio of a company’s price to earnings ratio to the I/B/E/S consensus estimate of the annual growth rate of its earnings.

The median multiples for the price to earnings ratio relating to the trading comparables are set forth below.

Trading Comparables Multiples

 

Measure

   Median

European Exchanges

  

2007 Estimated Price to Earnings Ratio

   21.3x

2008 Estimated Price to Earnings Ratio

   18.0x

North American Exchanges

  

2007 Estimated Price to Earnings Ratio

   38.5x

2008 Estimated Price to Earnings Ratio

   30.3x

Australian/Asian Exchanges

  

2007 Estimated Price to Earnings Ratio

   28.0x

2008 Estimated Price to Earnings Ratio

   24.8x

Based on its analysis, JPMorgan selected a reference range of 20.0x-22.0x 2007 EPS and 17.0-19.0x 2008 EPS for each of OMX and Nasdaq. These reference ranges implied a range of SEK 154.0 to SEK 169.4 and SEK 147.2 to SEK 164.5 per share for OMX Shares, respectively, based on its 2007 and 2008 earnings per share. The implied range resulting from OMX’s 2007 earnings per share reflects the exclusion of capital gains related to OMX’s sale of its shares in Orc Software from its 2007 earning per share. Based on Nasdaq’s 2007 earnings per share and its 2007 adjusted earnings per share, the reference ranges implied a range per share for Nasdaq Common Stock of $25.42 to $27.97 and $31.53 to $34.69, respectively. Based on Nasdaq’s 2008 earnings per share and its 2008 adjusted earnings per share, the reference ranges implied a range of $29.65 to $33.14 and $35.36 to $39.51, respectively. Nasdaq’s adjusted earnings per share used by JPMorgan in connection with the analysis described above includes an estimate of Nasdaq’s pro rata share of the LSE’s earnings and an estimate of related identifiable intangible amortization expense and excludes the estimated impact of projected dividends resulting from Nasdaq’s approximately 29% ownership of the LSE.

 

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Comparable Transactions Analysis

Using publicly available information, information it obtained from filings with the S.E.C., information it obtained from Datastream and research analyst reports, each as of May 21, 2007, JPMorgan examined the following transactions involving exchanges as a target company:

 

Announcement
Date

 

Acquiror

 

Target

05/11/2007

  Chicago Mercantile Exchange Holdings Inc.   CBOT Holdings, Inc.

04/30/2007

  Eurex   International Securities Exchange Holdings, Inc.

03/15/2007

  Intercontinental Exchange, Inc.   CBOT Holdings, Inc.

10/17/2006

  Chicago Mercantile Exchange Holdings Inc.   CBOT Holdings, Inc.

09/15/2006

  Intercontinental Exchange, Inc.   Board of Trade of the City of New York, Inc.

05/22/2006

  NYSE Group, Inc.   Euronext N.V.

04/11/2006

  Nasdaq   LSE

04/22/2005

  Nasdaq   Instinet Group Incorporated

04/20/2005

  NYSE Group, Inc.   Archipelago Holdings, Inc.

For each of these transactions, JPMorgan presented, among other measures, the following information:

 

   

ratio of the transaction value to the last twelve months, which we refer to as LTM EBITDA;

 

   

ratio of the transaction value to an estimate of the twelve months forward, which we refer to as NTM, EBITDA;

 

   

ratio of the equity value to LTM Earnings; and

 

   

ratio of equity value to NTM Earnings.

The median and mean multiples for certain measures relating to the comparable transactions are set forth below. The table also sets forth the reference range of multiples selected by JPMorgan based on a review of the comparable transaction multiples.

 

Measure

  

Precedent Transaction Multiples

   Mean    Median    Reference Range

LTM EBITDA

   22.0x    24.0x    16.0x-18.0x

NTM EBITDA

   16.5x    17.8x    14.0x-16.0x

LTM Earnings

   42.7x    47.4x    24.0x-27.0x

NTM Earnings

   30.9x    33.5x    21.0x-23.0x

The reference range of LTM EBITDA implied a range of SEK 187.7 to SEK 211.9 per share for OMX Shares. The reference range of NTM EBITDA implied a range of SEK 179.2 to SEK 205.6 per share for OMX Shares. The reference range of LTM EPS implied a range of SEK 183.0 to SEK 205.9 per share for OMX Shares. The reference range of NTM EPS implied a range of SEK 169.8 to SEK 185.9 per share for OMX Shares.

Discounted Cash Flow Analysis

JPMorgan calculated ranges of implied equity value per share for both OMX Shares and Nasdaq Common Stock by performing discounted cash flow analyses for OMX and Nasdaq. For both OMX and Nasdaq, the discounted cash flow analysis assumed a valuation date of September 30, 2007. For OMX, JPMorgan also

 

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conducted a discounted cash flow analysis that took into account the effect of the impact of the value of the expected synergies that could be achieved by the combined company after taking into account the cost of achieving the synergies resulting in connection with the Offer.

A discounted cash flow analysis is a traditional method of evaluating a business by estimating the future cash flows of a business and taking into consideration the time value of money with respect to those future cash flows by calculating the “present value” of the estimated future cash flows of the business. “Present value” refers to the current value of one or more future cash payments, or “cash flows,” from a business and is obtained by discounting those future cash flows or amounts by a discount rate that takes into account macro-economic assumptions, estimates of risk, the opportunity cost of capital, expected returns and other appropriate factors. Other financial terms utilized below are “terminal value,” which refers to the value of all future cash flows from a business beyond the end of a specific forecast period, and “unlevered free cash flows,” which refers to a calculation of the future cash flows of a business without including in such calculation any debt servicing costs.

In arriving at the estimated equity values per share of OMX Shares and Nasdaq Common Stock, JPMorgan applied a range of discount rates of 9.0% to 11.0% for OMX and a range of discount rates of 10.0% to 12.0% for Nasdaq to the unlevered free cash flows that OMX and Nasdaq were respectively projected to generate on an annual basis during the calendar year forecast period of 2007 through 2016. JPMorgan also calculated the terminal value as of December 31, 2016 for each of OMX and Nasdaq assuming perpetual free cash flow growth rates of 2.5% to 3.5% for both OMX and Nasdaq. JPMorgan’s decision to use perpetual growth rates of 2.5% to 3.5% was based on its judgment of the long-term growth prospects of OMX, Nasdaq and the industry in which they participate as well as the long-term growth prospects of the overall economy. Based on these growth and discount rate assumptions, JPMorgan calculated the present value of the unlevered free cash flows of calendar years 2007 through 2016. JPMorgan then calculated the present value of the terminal values for OMX and Nasdaq using the discount rates specified above. For both OMX and Nasdaq, the present value of unlevered free cash flows and terminal values were added together in order to derive the unlevered enterprise values for each of OMX and Nasdaq, respectively. In arriving at the estimated equity values per share of OMX Shares and Nasdaq Common Stock, JPMorgan calculated the equity value for both OMX and Nasdaq by reducing the unlevered enterprise values of each of OMX and Nasdaq by the value of their respective indebtedness, and by adding the value of their respective cash and cash equivalents and marketable securities. The equity values for each of OMX and Nasdaq were divided by the number of fully diluted shares outstanding for each of OMX and Nasdaq, respectively, and treating the Nasdaq Voting Notes on an “as converted” basis. For purposes of Nasdaq’s discounted cash flow analysis, the analysis excludes all earnings and dividends attributable to Nasdaq’s proportional ownership of the LSE and includes the market value of such ownership.

Based on the assumptions set forth above, this analysis implied a range of SEK 159.8 to SEK 174.6 per share for OMX Shares, and a range of $29.34 to $34.10 per share for Nasdaq Common Stock. JPMorgan also calculated the implied value range per share of OMX Shares based on the after-tax present value of the expected synergies that could be achieved by the combined company after taking into account the cost of achieving the synergies. Assuming the achievement of such synergies, the analysis implied a range of SEK 217.5 to SEK 236.0 per share for OMX Shares.

Relative Contribution Analysis

JPMorgan reviewed the contribution of OMX and Nasdaq to the combined company relative to forecasted revenue, EBITDA, and net income of the combined company for the calendar years ending December 31, 2007 and December 31, 2008 as well as the market capitalization of OMX and Nasdaq as of May 21, 2007. The calendar year 2007 and 2008 forecasted revenue, EBITDA and net income for both OMX and Nasdaq were based on research analyst reports. The relative contribution analysis did not give effect to the impact of any synergies as a result of the proposed Offer and assumed OMX shareholders would receive only Nasdaq stock as consideration in connection with the Offer. JPMorgan adjusted the relative contribution percentages resulting from the estimated revenue and EBITDA for the calendar years ending December 31, 2007 and December 31,

 

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2008 to reflect the relative capital structures for each of OMX and Nasdaq. The relative contribution percentages resulting from such revenue and EBITDA figures were used to determine the implied pro forma ownership percentages, which we refer to as PF Ownership, of the combined company for the common shareholders of OMX and Nasdaq. The PF Ownership percentages were used to determine the implied exchange ratio of each OMX Share to Nasdaq Common Stock. Additionally, JPMorgan conducted a similar analysis based on the net income of the combined company for the calendar year ending December 31, 2007 and December 31, 2008 using equity value measures as well as the market capitalizations of OMX and Nasdaq. The following table presents the results of the relative contribution analysis:

 

     Percentage Implied Ownership of the
Combined Company
     
     OMX Shareholders     Nasdaq Shareholders     Implied Exchange
Ratio

Revenue

      
Calendar Year Ending December 31, 2007    48.4 %   51.6 %   1.1915x
Calendar Year Ending December 31, 2008    47.4 %   52.6 %   1.1443x

EBITDA

      
Calendar Year Ending December 31, 2007    39.1 %   60.9 %   0.8181x
Calendar Year Ending December 31, 2008    36.8 %   63.2 %   0.7411x

Net Income

      
Calendar Year Ending December 31, 2007    43.6 %   56.4 %   0.9816x
Calendar Year Ending December 31, 2008    36.3 %   63.7 %   0.7263x

Market Capitalization

   38.1 %   61.9 %   0.7833x

Relative Valuation Analysis

JPMorgan analyzed the consideration to be received by the holders of OMX Shares pursuant to the Offer by calculating the range of the implied exchange ratios of OMX Shares to Nasdaq Common Stock for the corresponding valuation methodology. In its analysis, JPMorgan compared the highest value per share of OMX Shares to the lowest value per share of Nasdaq Common Stock to derive the highest implied exchange ratio. JPMorgan also compared the lowest value per share of OMX Shares to the highest value per share of Nasdaq Common Stock to derive the lowest implied exchange ratio. Based on a Nasdaq share price of $32.25, an OMX offer price of SEK 205 per share, a SEK/USD exchange rate of 6.84 to 1, and a 54%/46% nominal stock cash consideration mix, the implied exchange ratio for the Offer was 0.502x Nasdaq shares per OMX Share. The results of this analysis are as follows:

 

Valuation Methodology

  

Range of Implied Exchange Ratios

52-Week Natural Exchange Ratios

   0.243x-0.467x

Public Comparables

   0.351x-0.526x

Discounted Cash Flow

   0.370x-0.470x

Discounted Cash Flow with Synergies

   0.504x-0.635x

Contribution Analysis

   0.393x-0.644x

The foregoing summary of certain material financial analyses does not purport to be a complete description of the analyses or data presented by JPMorgan. The preparation of a fairness opinion is a complex process involving various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances, and therefore, is not readily susceptible to partial analysis or summary description. JPMorgan believes that the foregoing summary and its analyses must be considered as a whole and that selecting portions of the foregoing summary and these analyses, without considering all of its analyses as a whole, could create an incomplete view of the processes underlying the analyses and its opinion. No single factor or analysis was determinative of JPMorgan’s fairness determination,

 

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and JPMorgan did not attribute any particular weight to any analysis or factor considered by it. Rather, JPMorgan considered the totality of the factors and analyses performed in determining its opinion and made its determination as to fairness based on its professional judgment and after considering the results of all of its analyses. JPMorgan based its analyses on assumptions that it deemed reasonable, including those concerning general business, economic, market and financial conditions, industry-specific factors, and other matters. Analyses based upon forecasts of future results are inherently uncertain, as they are subject to numerous factors or events beyond the control of the parties and their advisors. Accordingly, forecasts and analyses used or made by JPMorgan are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by those analyses. Moreover, JPMorgan’s analyses are not and do not purport to be appraisals or otherwise reflective of the prices at which businesses actually could be bought or sold. None of the selected companies reviewed as described in the above summary is identical to OMX or Nasdaq, and none of the selected transactions reviewed was identical to the Offer. However, the companies selected were chosen because they are publicly traded companies with operations and businesses that, for purposes of JPMorgan’s analysis, may be considered similar to those of Nasdaq and OMX. The transactions selected were similarly chosen because their participants, size and other factors, for purposes of JPMorgan’s analysis, may be considered similar to the Offer. The analyses necessarily involve complex considerations and judgments concerning, with respect to the selected companies, differences in financial and operating characteristics of the comparable companies and other factors that could affect public trading values of such comparable companies and, with respect to the selected transactions, differences in financial and operational characteristics of the companies involved and other factors that could affect the companies compared to Nasdaq and OMX and the transactions compared to the Offer. Mathematical analysis (such as determining the median) is not by itself a meaningful method of using selected company or acquisition transaction data.

The terms of the Offer were determined through negotiations between Nasdaq and OMX and were approved by Nasdaq’s Board of Directors. Although JPMorgan provided advice to Nasdaq during the course of the negotiations, the decision to enter into the Offer was solely that of Nasdaq’s Board of Directors. As described above, the presentation and opinion of JPMorgan was only one of a number of factors taken into consideration by Nasdaq’s Board of Directors in making its determination to approve and adopt the Offer and the transactions contemplated by the Offer.

As a part of its investment banking business, JPMorgan and its affiliates are continually engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, investments for passive and control purposes, negotiated underwritings, secondary distributions of listed and unlisted securities, private placements, and valuations for estate, corporate and other purposes. JPMorgan and its affiliates have provided, and in the future may continue to provide, for compensation, investment banking and other services to Nasdaq and its affiliates, including acting as joint lead arranger and joint bookrunner on senior secured credit facilities to finance Nasdaq’s acquisition of INET ECN in 2005 and acting as joint bookrunner on the public offering of Nasdaq Common Stock in February 2006. In the ordinary course of business, JPMorgan and its affiliates may actively trade in the debt and equity securities of Nasdaq and OMX for their own accounts or for the accounts of their customers, and accordingly, may at any time hold a long or short position in such securities.

Nasdaq selected JPMorgan to advise it and deliver a fairness opinion with respect to the Offer on the basis of its experience and its familiarity with Nasdaq. Pursuant to its engagement letter with JPMorgan, Nasdaq has agreed to pay JPMorgan customary fees in connection with its services. In addition, Nasdaq has agreed to reimburse JPMorgan for its expenses incurred in connection with its services, including the fees and disbursements of counsel, and will indemnify JPMorgan against certain liabilities, including liabilities arising under federal securities laws.

 

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Opinions of Morgan Stanley & Co. Limited and Credit Suisse Securities (Europe) Limited—Financial Advisors to OMX

OMX’s Board of Directors retained Morgan Stanley and Credit Suisse to provide financial advisory services in connection with the transactions contemplated by the Transaction Agreement, including the Offer. The terms and conditions of the Offer are more fully set out in the Transaction Agreement.

At a meeting of OMX’s Board of Directors on May 24, 2007, Morgan Stanley and Credit Suisse each rendered its oral opinion, subsequently confirmed in writing, to the effect that, as of May 24, 2007 and based upon and subject to the assumptions and limitations set forth in their opinions, the consideration to be received by the holders of OMX Shares pursuant to the Offer was fair, from a financial point of view, to such holders.

The full text of the written opinions of Morgan Stanley and Credit Suisse, each dated as of May 24, 2007, are attached to this document as Annex E and Annex F, respectively. The opinions set forth, among other things, the assumptions made, procedures followed, matters considered and limitations on the scope of the review undertaken by Morgan Stanley and Credit Suisse in rendering their opinions. We encourage you to read the entire opinions carefully. Morgan Stanley’s and Credit Suisse’s opinions are directed to OMX’s Board of Directors and address only the fairness, from a financial point of view, of the consideration to be received by the holders of OMX Shares pursuant to the Offer as of the date of the opinions. They do not address any other aspects of the Offer and do not constitute a recommendation as to whether such shareholder should tender OMX Shares in the Offer, or any election such shareholder should make in connection with the Mix and Match Facility or any other action that a shareholder should take relating to the Offer. The summaries of the opinions of Morgan Stanley and Credit Suisse set forth in this document are qualified in their entirety by reference to the full texts of the opinions.

Opinion of Morgan Stanley

In connection with rendering its opinion, Morgan Stanley, among other things:

 

   

reviewed certain publicly available financial statements and other business and financial information of OMX and Nasdaq, respectively;

 

   

reviewed certain internal financial statements and other financial and operating data concerning OMX and Nasdaq, respectively;

 

   

reviewed certain publicly available financial projections of OMX and Nasdaq, respectively;

 

   

reviewed information relating to certain strategic, financial and operational benefits anticipated from the transaction, prepared by the managements of OMX and Nasdaq, respectively;

 

   

discussed the past and current operations and financial condition and the prospects of OMX, including information relating to certain strategic, financial and operational benefits anticipated from the transaction, with senior executives of OMX;

 

   

discussed the past and current operations and financial condition and the prospects of Nasdaq, including information relating to certain strategic, financial and operational benefits anticipated from the transaction, with senior executives of Nasdaq;

 

   

reviewed the pro forma impact of the transaction on Nasdaq’s earnings per share, cash flow, consolidated capitalization and financial ratios;

 

   

reviewed the reported prices and trading activity for OMX Shares and existing Nasdaq Common Stock;

 

   

compared the financial performance of OMX and Nasdaq and the prices and trading activity of OMX Shares and existing Nasdaq Common Stock with that of certain other publicly-traded companies comparable with OMX and Nasdaq, respectively, and their securities;

 

   

reviewed the financial terms, to the extent publicly available, of certain comparable acquisition transactions;

 

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participated in certain discussions and negotiations among representatives of OMX and Nasdaq and their financial and legal advisors;

 

   

reviewed the Transaction Agreement, the Joint Press Release and certain related documents; and

 

   

performed such other analyses, reviewed such other information and considered such other factors as Morgan Stanley deemed appropriate.

In arriving at its opinion, Morgan Stanley assumed and relied upon, without independent verification, the accuracy and completeness of the information supplied or otherwise made available to them by OMX and Nasdaq for the purposes of its opinion. With respect to the financial projections, including information relating to certain strategic, financial and operational benefits anticipated from the transaction, Morgan Stanley assumed that they had been reasonably prepared on bases reflecting the best currently available estimates and judgments of the future financial performance of OMX and Nasdaq. In addition, Morgan Stanley assumed that the Offer would be consummated in accordance with the terms set forth in the Transaction Agreement without any waiver, amendment or delay of any terms or conditions. In particular Morgan Stanley relied upon, without independent verification, the assessment by the managements of OMX and Nasdaq of:

 

   

the strategic, financial and other benefits expected to result from the transaction;

 

   

the timing and risks associated with the integration of OMX and Nasdaq;

 

   

their ability to retain key employees of OMX and Nasdaq, respectively; and

 

   

the validity of, and risks associated with, OMX and Nasdaq’s existing and future technologies, intellectual property, products, services and business models.

Morgan Stanley are not legal, tax, or regulatory advisors. Morgan Stanley are financial advisors only and have relied upon, without independent verification, the assessment of Nasdaq and OMX and their legal, tax, or regulatory advisors with respect to legal, tax, or regulatory matters. Morgan Stanley did not make any independent valuation or appraisal of the assets or liabilities of OMX, nor were they furnished with any such appraisals. Morgan Stanley are not legal experts, and for purposes of their analysis did not make any assessment of the status of any outstanding litigation involving Nasdaq or OMX and excluded the effects of any such litigation in their analysis. Morgan Stanley’s opinion was necessarily based on financial, economic, market and other conditions as in effect on, and the information made available to them as of, the date of their opinion. Events occurring after the date of the opinion, may affect its opinion and the assumptions used in preparing it, and Morgan Stanley did not assume any obligation to update, revise or reaffirm its opinion. Furthermore, Morgan Stanley’s opinion did not address the relative merits of the transaction as compared to any other alternative business transaction, or other alternatives, or whether or not such alternatives could be achieved or were available. Morgan Stanley assumed that in connection with the receipt of all the necessary governmental, regulatory or other approvals and consents required for the proposed Offer, no delays, limitations, conditions or restrictions will be imposed that would have a material adverse effect on the contemplated benefits expected to be derived in the proposed Offer.

OMX’s Board of Directors selected Morgan Stanley to act as its financial advisor based on Morgan Stanley’s qualifications, expertise and reputation and its knowledge of the business and affairs of OMX. Morgan Stanley is an internationally recognized investment banking and advisory firm. Morgan Stanley, as part of its investment banking and financial advisory business, is continuously engaged in the valuation of businesses and securities in connection with mergers and acquisitions, negotiated underwritings, competitive biddings, secondary distributions of listed and unlisted securities, private placements and valuations for corporate and other purposes. In the ordinary course of its trading, brokerage, investment management and financing activities, Morgan Stanley or its affiliates may at any time hold long or short positions, and may trade or otherwise effect transactions, for its own account or the accounts of customers, in debt or equity securities or senior loans of Nasdaq, OMX or any other company or any currency or commodity that may be involved in this transaction.

 

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In connection with the financial advisory services provided to OMX relating to the Offer, OMX has agreed to pay Morgan Stanley customary fees in connection with its services. OMX has also agreed to reimburse Morgan Stanley for its expenses incurred in performing its services and to indemnify Morgan Stanley and its affiliates, their respective directors, officers, agents and employees and each person, if any, controlling Morgan Stanley or any of its affiliates against certain liabilities and expenses, including certain liabilities under federal securities laws, related to or arising out of Morgan Stanley’s engagement and any related transactions. In the past, Morgan Stanley and its affiliates have provided financial advisory and financing services for Nasdaq and have received fees in connection with such services. Morgan Stanley may also seek to provide such services to Nasdaq and OMX in the future and will receive fees for the rendering of these services.

Opinion of Credit Suisse

In arriving at its opinion, Credit Suisse reviewed a draft, dated May 20, 2007, of the Transaction Agreement and certain publicly available business and financial information relating to OMX and Nasdaq. Credit Suisse also reviewed certain other information relating to OMX and Nasdaq provided to or discussed with Credit Suisse by OMX and Nasdaq, including publicly available sellside analysts’ consensus forecasts relating to OMX and Nasdaq, and met with OMX’s and Nasdaq’s managements to discuss OMX’s and Nasdaq’s business and prospects. At OMX’s direction, financial forecasts for OMX and Nasdaq for calendar years 2010 through 2012, which we refer to as the Forecasts, were extrapolated from publicly available sellside analysts’ consensus forecasts for calendar years 2007, 2008 and 2009 using assumptions and other guidance provided to or discussed with Credit Suisse by OMX’s and Nasdaq’s managements. Credit Suisse also considered certain financial and stock market data of OMX and Nasdaq, and compared that data with similar data for other publicly held companies in businesses Credit Suisse deemed similar to that of OMX and Nasdaq. Credit Suisse also considered, to the extent publicly available, the financial terms of certain other business combinations and other transactions recently effected or announced. Credit Suisse also considered such other information, financial studies, analyses and investigations and financial, economic and market criteria which it deemed relevant.

In connection with its review, Credit Suisse did not assume any responsibility for independent verification of any of the foregoing information and relied on such information being complete and accurate in all material respects. With respect to the publicly available financial forecasts for OMX and Nasdaq that Credit Suisse reviewed, including the Forecasts, Credit Suisse assumed, with OMX’s consent, that such forecasts represented reasonable estimates as to the future financial performance of OMX and Nasdaq. With respect to certain estimates of strategic benefits and potential cost savings and other synergies anticipated by the managements of OMX and Nasdaq to result from the Offer, Credit Suisse assumed that such estimates were reasonably prepared on bases reflecting the best currently available estimates and judgments of OMX’s and Nasdaq’s managements and that such benefits and synergies will be realized in the amounts and at the times indicated. In addition, Credit Suisse relied upon, with OMX’s consent and without independent verification, the assessments of OMX’s and Nasdaq’s managements as to:

 

   

their ability to retain key employees of OMX and Nasdaq;

 

   

their ability to integrate the business of OMX with Nasdaq; and

 

   

the existing technology, products and services of OMX and Nasdaq and the validity of, and risks associated with, the future technology, products and services of OMX and Nasdaq.

Credit Suisse also assumed, with OMX’s consent, that, in the course of obtaining any regulatory or third party consents, approvals or agreements in connection with the Offer, no delay, limitation, restriction or condition would be imposed that would have an adverse effect on OMX, Nasdaq or the Offer, and that the Offer would be consummated in accordance with the terms of the Transaction Agreement reviewed by Credit Suisse without waiver, modification or amendment of any material term, condition or agreement. Representatives of OMX advised Credit Suisse, and Credit Suisse further assumed, that the executed Transaction Agreement would conform to the draft reviewed by Credit Suisse in all respects material to its analysis.

 

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Credit Suisse was not requested to, and did not, make an independent evaluation or appraisal of the assets or liabilities, contingent or otherwise, of OMX or Nasdaq, and Credit Suisse was not furnished with any such evaluations or appraisals. Credit Suisse’s opinion addressed only the fairness, from a financial point of view and as of the date of its opinion, of the consideration to be received by the holders of OMX Shares pursuant to the Offer, and did not address any other aspect or implication of the Offer or any other agreement, arrangement or understanding entered into in connection with the Offer or otherwise, including any agreement, arrangement or understanding that any holder of OMX Shares may enter into with Nasdaq or any of its affiliates. Credit Suisse was not requested to, and did not, solicit third party indications of interest in acquiring all or any part of OMX, nor was it requested to, and it did not, participate in the negotiation or structuring of the Offer. Credit Suisse’s opinion was necessarily based upon information made available to it as of the date of its opinion and financial, economic, market and other conditions as they existed and could be evaluated on the date of its opinion. Credit Suisse did not express any opinion as to what the actual value of Nasdaq Common Stock will be when issued to the holders of OMX Shares pursuant to the Offer or the prices at which Nasdaq Common Stock will trade at any time. Credit Suisse’s opinion did not address the relative merits of the Offer as compared to alternative transactions or strategies that might be available to OMX, nor did it address the underlying business decision of OMX to proceed with the Offer. Except as described above, OMX imposed no other limitations on Credit Suisse with respect to the investigations made or procedures followed in rendering its opinion.

OMX selected Credit Suisse based on Credit Suisse’s qualifications, experience, reputation and familiarity with OMX. Credit Suisse is an internationally recognized investment banking firm and is regularly engaged in the valuation of businesses and securities in connection with mergers and acquisitions, leveraged buyouts, negotiated underwritings, competitive biddings, secondary distributions of listed and unlisted securities, private placements and valuations for corporate and other purposes.

OMX has agreed to pay Credit Suisse customary fees in connection with its services. In addition, OMX has agreed to reimburse Credit Suisse for its reasonable expenses, including reasonable fees and expenses of legal counsel, and to indemnify Credit Suisse and related parties against certain liabilities and other items, including liabilities under the federal securities laws, arising out of its engagement.

From time to time, Credit Suisse and its affiliates in the past have provided, currently are providing and in the future may provide investment banking and other financial services to OMX and Nasdaq, for which services Credit Suisse and its affiliates have received, and may receive, compensation. Credit Suisse is a full service securities firm engaged in securities trading and brokerage activities as well as providing investment banking and other financial services. In the ordinary course of business, Credit Suisse and its affiliates may acquire, hold or sell, for its and its affiliates’ own accounts and the accounts of customers, equity, debt and other securities and financial instruments (including bank loans and other obligations) of OMX, Nasdaq and any other entities that may be involved in the Offer, as well as provide investment banking and other financial services to such companies.

Summary of Financial Analyses of Morgan Stanley and Credit Suisse

The following is a summary of the material financial analyses performed by Morgan Stanley and Credit Suisse in connection with their opinions, each dated May 24, 2007. The financial analyses summarized below include information presented in tabular format. In order to fully understand Morgan Stanley’s and Credit Suisse’s financial analyses, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses. Considering the data in the tables below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of the financial analyses.

 

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52-week Common Stock Trading Range for OMX and Nasdaq

Morgan Stanley and Credit Suisse analyzed the historical closing prices for OMX Shares for the period from May 24, 2006 to May 23, 2007. During that time, the lowest closing price for OMX Shares was SEK 104.00 per share, the highest closing price was SEK 188.50 per share and the average closing price was SEK 132.87 per share. Morgan Stanley and Credit Suisse also noted that the implied purchase price of OMX Shares, based on the closing price of Nasdaq Common Stock of $33.19 per share on May 23, 2007, was SEK 208.1 per share.

Morgan Stanley and Credit Suisse also analyzed the historical closing prices for Nasdaq Common Stock for the period from May 24, 2006 to May 23, 2007. During that time, the lowest closing price for Nasdaq Common Stock was $23.91 per share, the highest closing price was $42.37 and the average closing price was $31.47 per share.

Analyst Price Targets

Morgan Stanley and Credit Suisse reviewed and analyzed future public market trading price targets for OMX Shares and Nasdaq Common Stock prepared and published by equity research analysts, for the period from February 1, 2007 to May 22, 2007. These targets reflect each analyst’s estimate of the future public market trading price of OMX Shares and Nasdaq Common Stock, respectively. Based on these reports, the analyst price targets for OMX ranged from SEK 120.00 to SEK 190.00 per share, and the average of the analyst price targets for OMX was SEK 167.44 per share. The analyst price targets for Nasdaq ranged from $30.00 to $45.00, and the average of the analyst price targets for Nasdaq was $37.14 per share. Morgan Stanley and Credit Suisse further noted that adding a 20-30% change of control premium to the average of the analyst price targets for OMX yielded a price target range of SEK 199.20 to 215.80 per share.

The public market trading price targets published by securities research analysts do not necessarily reflect current market trading prices for OMX Shares and Nasdaq Common Stock and these estimates are subject to uncertainties, including the future financial performances of OMX and Nasdaq and future financial market conditions.

Comparable Companies Analysis

Morgan Stanley and Credit Suisse compared certain financial information of OMX and Nasdaq with publicly available consensus earnings estimates for other companies that shared similar business characteristics to OMX and Nasdaq. The companies used in this comparison included the following companies:

 

   

Deutsche Börse AG;

 

   

the LSE;

 

   

Bolsas y Mercados Espanoles, Sociedad Holding De Mercados y Sistemas Financieros, S.A.;

 

   

Hellenic Exchanges S.A.;

 

   

NYSE Euronext;

 

   

Chicago Mercantile Exchange Holdings Inc.;

 

   

NYMEX Holdings Inc.;

 

   

CBOT Holdings Inc.;

 

   

IntercontinentalExchange Inc.;

 

   

TSX Group Inc.; and

 

   

International Securities Exchange Holdings, Inc.

 

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For purposes of this analysis, Morgan Stanley and Credit Suisse analyzed the following statistics of each of these companies for comparison purposes:

 

   

the ratio of price to estimated earnings for calendar year 2007; and

 

   

the ratio of price to estimated earnings for calendar year 2008.

Based on the resulting ratios, also referred to as the price to earnings multiples, derived from the comparable companies, Morgan Stanley and Credit Suisse derived a selected range of price to earnings multiples of the comparable companies and then applied this range of multiples to the relevant OMX or Nasdaq financial statistic. Estimated calendar years 2007 and 2008 earnings for the comparable companies, OMX and Nasdaq were based on publicly available equity research estimates. The following table summarizes the results of this analysis for OMX and Nasdaq’s outstanding shares and options as of May 18, 2007:

 

Calendar Year Financial

  

Financial

Statistic

(in millions)

   Comparable
Company Price to
Earnings Multiple
   Implied Per Share Equity
Reference Range

OMX

        

Price to Estimated 2007 Earnings

   SEK 939    19.0x – 22.5x    SEK 147.89 – SEK 175.05

Price to Estimated 2008 Earnings

   SEK 1,036    17.5x – 20.0x    SEK 150.28 – SEK 171.80

Nasdaq

        

Price to Estimated 2007 Earnings

   $239    19.0x – 25.0x    $29.52 – $38.84

Price to Estimated 2008 Earnings

   $316    15.0x – 20.0x    $30.87 – $41.15

No company utilized in the comparable company analysis is identical to OMX or Nasdaq. In evaluating comparable companies, Morgan Stanley and Credit Suisse made judgments and assumptions with regard to industry performance, general business, economic, market and financial conditions and other matters, many of which are beyond the control of OMX or Nasdaq, such as the impact of competition on the businesses of OMX or Nasdaq and the industry generally, industry growth and the absence of any adverse material change in the financial condition and prospects of OMX or Nasdaq or the industry or in the financial markets in general. Mathematical analysis (such as determining the average or median) is not in itself a meaningful method of using comparable company data.

Precedent Transactions Analysis

Morgan Stanley and Credit Suisse also analyzed the ratio of equity value, defined as market capitalization, to estimated next twelve month net income of 19 selected transactions in the exchange sector since 1997 and derived a selected range of price to net income multiples of the selected transactions. Morgan Stanley and Credit Suisse then applied this range of multiples to the relevant OMX financial statistic. Estimated net income for the target companies in the selected transactions and OMX were based on publicly available equity research estimates. The following table summarizes the results of this analysis:

 

Precedent Transaction Financial Statistics

  

OMX Financial
Statistic

(in millions)

   Precedent Transactions
Price to Net Income Multiple
  

Implied Per Share

Equity Reference Range

Equity Value to Estimated Next Twelve Months Net Income    SEK 939    20.0x – 25.0x    SEK 155.60 – SEK 194.50

No company or transaction utilized in the precedent transaction analyses is identical to OMX or the Offer. In evaluating the precedent transactions, Morgan Stanley and Credit Suisse made judgments and assumptions with regard to general business, market and financial conditions and other matters, which are beyond the control of OMX and Nasdaq, such as the impact of competition on the business of OMX or the industry generally, industry growth and the absence of any adverse material change in the financial condition of OMX or the industry or in the financial markets in general, which could affect the public trading value of the companies and the aggregate value of the transactions to which they are being compared.

 

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Discounted Cash Flow Analysis

Morgan Stanley and Credit Suisse performed a discounted cash flow analysis for each of OMX and Nasdaq in order to derive implied per share equity reference ranges for OMX and Nasdaq. The financial information used in this analysis was based on a consensus of financial projections by equity research analysts covering OMX and Nasdaq, respectively. In each case, Morgan Stanley and Credit Suisse calculated the present value of the unlevered free cash flows for the period beginning March 31, 2007 and ending on December 31, 2012. Morgan Stanley and Credit Suisse then added to this amount the present value of a “terminal value,” which was calculated by dividing (x) the applicable company’s projected free cash flow for 2012 by (y) the balance of estimated weighted average cost of capital, referred to as WACC, minus a perpetual growth rate. Morgan Stanley and Credit Suisse calculated terminal values for OMX by utilizing a WACC of 9.0% to 10.0% and a perpetual growth rate range of 2.5% to 3.5% and calculated terminal values for Nasdaq by utilizing a WACC of 10.0% to 11.0% and perpetual growth rate ranges of 2.5% to 3.5%. For purposes of this analysis, Morgan Stanley and Credit Suisse assumed a 25% tax rate for OMX and a 40% tax rate for Nasdaq. The following tables summarize the results of this analysis:

 

Discounted Cash Flow Analysis

   Implied Per Share Equity Reference Range

OMX

   SEK 120.53 – SEK 162.13

Morgan Stanley and Credit Suisse further noted that giving effect to 50% of the capitalized value of revenue and cost synergies as estimated by Nasdaq’s management resulted in an implied per share equity reference range for OMX of SEK 146.27 to SEK 187.87 per share.

 

Discounted Cash Flow Analysis

   Implied Per Share Equity Reference Range

Nasdaq

   $26.35 – $32.56

In connection with the rendering of their opinions to OMX’s Board of Directors, Morgan Stanley and Credit Suisse performed a variety of financial and comparative analyses. The preparation of a financial opinion is a complex process and is not necessarily susceptible to a partial analysis or summary description. In arriving at their opinions, Morgan Stanley and Credit Suisse made qualitative judgments as to the significance and relevance of each analysis and factor that they considered, and they considered the results of all of their analyses as a whole and did not attribute any particular weight to any analysis or factor considered. Accordingly, Morgan Stanley and Credit Suisse believe that the summary provided and the analyses described above must be considered as a whole and that selecting any portion of these analyses, without considering all of them as a whole, would create an incomplete view of the process underlying its analyses and opinion. In addition, Morgan Stanley and Credit Suisse may have given various analyses and factors more or less weight than other analyses and factors and may have deemed various assumptions more or less probable than other assumptions, so that the ranges of valuations resulting from any particular analysis or combination of analyses described above should therefore not be taken to be Morgan Stanley’s or Credit Suisse’s view of the actual value of OMX and Nasdaq.

In performing their analyses, Morgan Stanley and Credit Suisse made numerous assumptions with respect to industry performance, general business and economic conditions and other matters. Many of these assumptions are beyond the control of OMX and Nasdaq. Any estimates contained in Morgan Stanley’s and Credit Suisse’s analyses are not necessarily indicative of future results or actual values, which may be significantly more or less favorable than those suggested by these estimates.

The analyses described above were prepared solely as a part of Morgan Stanley’s and Credit Suisse’s analyses of the fairness, from a financial point of view, of the consideration to be received by the holders of OMX Shares pursuant to the Offer, and in connection with the delivery by Morgan Stanley and Credit Suisse of their opinions, each dated May 24, 2007, to OMX’s Board of Directors.

In addition, Morgan Stanley’s and Credit Suisse’s opinions did not in any manner address the prices at which Nasdaq Common Stock would trade following consummation of the Offer, and neither Morgan Stanley

 

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nor Credit Suisse expressed an opinion or recommendation as to whether holders of OMX Shares should tender their OMX Shares in the Offer, or any election such shareholders should make in connection with the Mix and Match Facility, or any other action that such shareholders should take relating to the Offer.

The consideration offered to holders of OMX Shares in the Offer was determined through arm’s-length negotiations between OMX and Nasdaq, and OMX’s Board of Directors authorized OMX’s entry into the Offer. Morgan Stanley and Credit Suisse did not recommend any consideration to OMX or that any given level of consideration constituted the only appropriate consideration for the Offer.

In addition, Morgan Stanley’s and Credit Suisse’s opinions and their joint presentation to OMX’s Board of Directors was one of many factors taken into consideration by OMX’s Board of Directors in deciding to recommend the Offer. Consequently, the analyses as described above should not be viewed as determinative of the decision of OMX’s Board of Directors with respect to the Offer or of whether OMX’s Board of Directors would have been willing to agree to different consideration in the Offer.

Interests of Certain Persons in the Offer

In considering the approval by OMX’s Board of Directors of the Transaction Agreement and the Voting Agreements and its recommendation that OMX shareholders accept the Offer, OMX shareholders should be aware that members of OMX’s Board of Directors and OMX’s executive management have relationships, agreements or arrangements that provide them with interests in the Offer that may be in addition to or different from those of the OMX shareholders. OMX’s Board of Directors was aware of these relationships, agreements and arrangements during its deliberations on the merits of the Offer.

Nasdaq OMX Directors. Pursuant to the terms of the Transaction Agreement, the combined company’s board of directors will include five individuals from (or proposed for nomination by) OMX’s Board of Directors as of immediately prior to completion of the Offer. The Deputy Chairman of the combined company’s board of directors will for the two years following the completion of the Offer be one of the five individuals from (or proposed for nomination by) OMX’s Board of Directors as of immediately prior to the completion of the Offer. As of the completion of the Offer, OMX may elect to have one-third of the members of each committee of the combined company’s board of directors be selected from the directors selected from (or proposed for nomination by) OMX’s Board of Directors, subject to applicable law, regulation or stock exchange listing standard. As of the completion of the Offer, three individuals nominated by OMX will become members of the Nominating Committee of the combined company. For further information, see the section entitled “The Offer—Principal Agreements—Transaction Agreement” on page 82.

Nasdaq OMX Management. Pursuant to the Transaction Agreement, Nasdaq agreed that, following completion of the Offer, OMX’s Chief Executive Officer (currently Magnus Böcker) will serve as President of the combined company.

OMX Equity Compensation Awards. In connection with the Offer, all equity compensation awards based on OMX Shares will vest as set forth in the Transaction Agreement and will be exercisable immediately prior to the completion of the Offer. For further information, see the section entitled “Information about OMX—Potential Payments on Termination of Employment or Change in Control—Change in Control Payments” on page 138.

Based on holdings as of August 7, 2007, the value of the outstanding restricted shares held by OMX’s named executive officers that will so vest is anticipated, based upon the consideration set forth in the Transaction Agreement, to be as follows: Magnus Böcker, $1,500,825; Kristina Schauman, $364,994; Markus Gerdien, $268,633; Jukka Ruuska, $576,691; and Hans-Ole Jochumsen, $381,660. The estimated aggregate value for all executive officers and directors of such shares is $3,092,803.

None of OMX’s named executive officers holds outstanding unvested options as of August 7, 2007. However, Mr. Böcker holds unexercised, fully vested options to purchase 76,000 shares of OMX common stock that will be cashed out in accordance with the Transaction Agreement. The estimated value of such options is $373,399, based on the exchange rate in effect on August 6, 2007, equal to SEK/USD 6.7167.

 

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In addition, certain executives would become entitled to severance payments if they are terminated in connection with the Offer. Upon such termination, Mr. Böcker would be entitled to receive approximately $364,980, and Mr. Ruuska would be entitled to receive approximately $249,461.

OMX Shares. As of June 30, 2007, OMX’s executive officers and directors owned an aggregate of 203,346 OMX Shares, all of which are subject to the Offer. Of this amount, Magnus Böcker owned 140,822 OMX Shares. Mr. Böcker has agreed, pursuant to the Irrevocable Undertaking he executed in favor of Nasdaq, to accept the Offer and tender all of his shares in the Offer immediately prior to, but conditioned upon, the Offer being declared unconditional and to elect to receive shares of Nasdaq Common Stock in the Offer if the Offer includes a mix and match facility such as the Mix and Match Facility. For further information, see the section entitled “The Offer—Principal Agreements—Irrevocable Undertakings” on page 84.

Indemnification and Insurance. The Transaction Agreement provides that, upon completion of the Offer, the combined company will, to the fullest extent permitted by law, indemnify and hold harmless, and provide advancement of expenses to, all current directors and senior officers of OMX in each case for acts or omissions occurring at or prior to the completion of the Offer in connection with the approval of the Transaction Agreement and the consummation of the transactions contemplated thereby (but in no case for acts or omissions resulting from gross negligence or willful misconduct).

The Transaction Agreement also provides that the combined company will maintain for a period of six years after completion of the Offer the current directors’ and officers’ liability insurance policies maintained by OMX, or policies with the same coverage and containing terms and conditions that are not materially less advantageous in the aggregate than the current policies, in each case with respect to matters arising on or before the completion of the Offer, although the combined company will not be required to make annual premium payments in excess of 200% of the annual premiums currently paid by OMX for directors’ and officers’ liability insurance. The combined company may elect to purchase a six-year “tail” prepaid policy on the same terms and conditions and subject to the same annual premium expenditure limitation.

OMX Directors. Lars Wedenborn, a member of OMX’s Board of Directors, is also Chief Financial Officer of Investor AB, and Markku Pohjola, a member of OMX’s Board of Directors, is also Head of Group Processing and Technology of Nordea Bank AB. Both Investor AB and Nordea Bank AB are parties to the Irrevocable Undertakings.

Material U.S. Federal Income Tax Considerations

The following is a general discussion of certain U.S. federal income and estate tax consequences of the Offer. This discussion is based upon the provisions of the U.S. Internal Revenue Code of 1986, as amended, which we refer to as the Internal Revenue Code, the Treasury regulations promulgated thereunder and administrative and judicial interpretations thereof, all as of the date hereof, all of which are subject to change, possibly with retroactive effect. This discussion is limited to OMX shareholders that hold their shares as capital assets for U.S. federal income tax purposes. Furthermore, this discussion does not address all aspects of U.S. federal income and estate taxation that may be applicable to investors in light of their particular circumstances, or to investors subject to special treatment under U.S. federal income or estate tax law, such as banks, financial institutions, insurance companies, tax-exempt organizations, entities that are treated as partnerships for U.S. federal tax purposes, dealers in securities or currencies, expatriates, persons deemed to sell their OMX Shares under the constructive sale provisions of the Internal Revenue Code, persons who are subject to alternative minimum tax, persons who acquired their OMX Shares upon the exercise of stock options or otherwise as compensation and persons that hold their OMX Shares as part of a straddle, hedge, conversion transaction or other integrated investment. Furthermore, this discussion does not address any U.S. federal gift tax consequences or any state, local or foreign tax consequences. Prospective investors should consult their tax advisors regarding the U.S. federal, state, local and foreign income, estate and other tax consequences of the Offer.

 

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For purposes of this summary, the term “U.S. holder” means a beneficial owner of OMX Shares that is, for U.S. federal income and estate tax purposes:

 

   

a citizen or resident of the United States;

 

   

a corporation or other entity subject to tax as a corporation for such purposes that is created or organized under the laws of the United States or any political subdivision thereof;

 

   

an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or

 

   

a trust (A) if a court within the United States is able to exercise primary supervision over its administration and one or more U.S. persons have the authority to control all of its substantial decisions or (B) that has made a valid election to be treated as a U.S. person for such purposes.

For purposes of this summary, the term “non-U.S. holder” means a beneficial owner (other than a partnership) of OMX Shares that is not a U.S holder. If a partnership (including any entity or arrangement treated as a partnership for such purposes) owns OMX Shares, the tax treatment of a partner in the partnership will depend upon the status of the partner and the activities of the partnership. Partners in a partnership that owns OMX Shares should consult their tax advisors as to the particular U.S. federal income and estate tax consequences applicable to them.

Tax Consequences to U.S. Holders

Consequences of the Offer

The receipt of cash and shares of Nasdaq Common Stock, if any, in exchange for OMX Shares pursuant to the Offer will be a taxable transaction for United States federal income tax purposes. In general, a U.S. holder who receives cash and shares of Nasdaq Common Stock in exchange for OMX Shares pursuant to the Offer will recognize capital gain or loss for United States federal income tax purposes equal to the difference, if any, between:

 

   

the amount realized by such U.S. holder as described in the succeeding sentence; and

 

   

such U.S. holder’s adjusted tax basis in the shares of OMX exchanged therefor.

The amount realized generally will be the sum of:

 

   

the fair market value of the shares of Nasdaq Common Stock received pursuant to the Offer; and

 

   

the US dollar value of the Swedish Kronor received pursuant to the Offer.

For this purpose the fair market value of the shares will be determined on the settlement date of the Offer, in the case of a cash basis U.S. holder, and the date of sale, in the case of an accrual basis U.S. holder. An accrual basis U.S. holder, if it elects, may determine the US dollar value of the amount realized by translating the amount received at the spot rate of exchange on the settlement date of the Offer. If an accrual basis U.S. holder does not make such an election, such accrual basis U.S. holder may have foreign currency exchange gain or loss because of differences between the US dollars/Swedish Kronors exchange rates prevailing on the date of sale and on the settlement date. Any such currency gain or loss would be treated as ordinary income or loss and would be in addition to gain or loss realized by the U.S. holder on the disposition of OMX Shares. Gain or loss must be calculated separately for each block of OMX Shares (i.e. shares acquired at the same cost in a single transaction) exchanged for cash and shares of Nasdaq Common Stock in the exchange. Except with respect to foreign currency gain or loss, any such gain or loss generally would be long-term capital gain or loss if the holding period for the OMX Shares exceeded one year. Long-term capital gains of noncorporate taxpayers are generally taxable at reduced rates. The deductibility of capital losses is subject to limitations.

 

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Backup Withholding

Backup withholding may apply to payments made in connection with the Offer. Backup withholding will not apply, however, to a U.S. holder who (1) furnishes a correct taxpayer identification number and certifies that it is not subject to backup withholding on the substitute form W-9 or successor form, or (2) is otherwise exempt from backup withholding. Backup withholding is not an additional tax. Any amounts that are withheld under the backup withholding rules from a payment to a U.S. holder will be refunded or credited against the holder’s U.S. federal income tax liability, if any, provided that certain required information is furnished to the Internal Revenue Service.

Tax Consequences to Non-U.S. Holders

Consequences of the Offer

A non-U.S. holder generally will not be taxed upon the completion of the Offer unless:

 

   

the non-U.S. holder is an individual who holds OMX Shares as a capital asset, is present in the United States for 183 days or more during the taxable year of the disposition and meets certain other conditions; or

 

   

the gain is effectively connected with the non-U.S. holder’s conduct of a trade or business in the United States and, if certain income tax treaties apply, is attributable to a non-U.S. holder’s permanent establishment in the United States.

Individual non-U.S. holders who are subject to U.S. federal income tax because the holders were present in the United States for 183 days or more during the year of the Offer are taxed on their gains (including the gain from the disposition of the OMX Shares and net of applicable U.S. losses from sales or exchanges of other capital assets recognized during the year) at a flat rate of 30% or such lower rate as may be specified by an applicable income tax treaty. Other non-U.S. holders subject to U.S. federal income tax with respect to gain recognized in connection with the Offer generally will be taxed on any such gain on a net income basis at applicable graduated U.S. federal income tax rates and, in the case of foreign corporations, may be subject to an additional branch profits tax at a 30% rate or such lower rate as may be specified by an applicable income tax treaty.

Consequences of Ownership of Shares of Nasdaq Common Stock—Dividends

Dividends paid to a non-U.S. holder generally will be subject to withholding of U.S. federal income tax at a 30% rate or such lower rate as may be specified by an applicable income tax treaty. Non-U.S. holders should consult their tax advisors regarding their entitlement to benefits under an applicable income tax treaty and the manner of claiming the benefits of such treaty. A non-U.S. holder that is eligible for a reduced rate of withholding tax under an income tax treaty may obtain a refund or credit of any excess amounts withheld by filing an appropriate claim for refund with the Internal Revenue Service. Dividends that are effectively connected with a non-U.S. holder’s conduct of a trade or business in the United States and, if certain income tax treaties apply, that are attributable to a non-U.S. holder’s permanent establishment in the United States are not subject to the withholding tax described above but instead are subject to U.S. federal income tax on a net income basis at applicable graduated U.S. federal income tax rates. A non-U.S. holder must satisfy certain certification requirements for its effectively connected dividends to be exempt from the withholding tax described above. Dividends received by a foreign corporation that are effectively connected with its conduct of a trade or business in the United States may be subject to an additional branch profits tax at a 30% rate or such lower rate as may be specified by an applicable income tax treaty.

 

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Consequences of Ownership of Shares of Nasdaq Common Stock—Gain on Disposition of Shares of Nasdaq Common Stock

A non-U.S. holder generally will not be taxed on gain recognized on a disposition of shares of Nasdaq Common Stock unless:

 

   

the non-U.S. holder is an individual who holds shares of Nasdaq Common Stock as a capital asset, is present in the United States for 183 days or more during the taxable year of the disposition and meets certain other conditions;

 

   

the gain is effectively connected with the non-U.S. holder’s conduct of a trade or business in the United States and, if certain income tax treaties apply, is attributable to a non-U.S. holder’s permanent establishment in the United States; or

 

   

Nasdaq is or has been a “United States real property holding corporation” for U.S. federal income tax purposes at any time within the shorter of the five-year period ending on the date of disposition or the period that the non-U.S. holder held shares of Nasdaq Common Stock. Nasdaq does not believe that it has been, currently is, or will become, a United States real property holding corporation. If Nasdaq were or were to become a United States real property holding corporation at any time during the applicable period, however, any gain recognized on a disposition of shares of Nasdaq Common Stock by a non-U.S. holder that did not own (directly, indirectly or constructively) more than 5% of the outstanding shares of Nasdaq Common Stock during the applicable period would not be subject to U.S. federal income tax, provided that such shares of Nasdaq Common Stock are “regularly traded on an established securities market” (within the meaning of Section 897(c)(3) of the Internal Revenue Code).

Individual non-U.S. holders who are subject to U.S. federal income tax because the holders were present in the United States for 183 days or more during the year of disposition are taxed on their gains (including gains from the sale of shares of Nasdaq Common Stock and net of applicable U.S. losses from sales or exchanges of other capital assets recognized during the year) at a flat rate of 30% or such lower rate as may be specified by an applicable income tax treaty. Other non-U.S. holders subject to U.S. federal income tax with respect to gain recognized on the disposition of shares of Nasdaq Common Stock generally will be taxed on any such gain on a net income basis at applicable graduated U.S. federal income tax rates and, in the case of foreign corporations, the branch profits tax discussed above also may apply.

Federal Estate Tax

Shares of Nasdaq Common Stock that are owned or are treated as owned by an individual who is a non-U.S. holder at the time of death will be included in the individual’s gross estate for U.S. federal estate tax purposes, and, therefore, U.S. federal estate tax may be imposed with respect to the value of such stock, unless an applicable estate tax or other treaty provides otherwise.

Information Reporting and Backup Withholding

In general, backup withholding will apply to dividends on shares of Nasdaq Common Stock paid to a non-U.S. holder, unless the holder has provided the required certification that it is a non-U.S. holder and the payor does not have actual knowledge (or reason to know) that the holder is a U.S. person. Generally, information will be reported to the Internal Revenue Service regarding the amount of dividends paid, the name and address of the recipient, and the amount, if any, of tax withheld. These information reporting requirements apply even if no tax was required to be withheld. A similar report is sent to the recipient of the dividend.

In general, backup withholding and information reporting will apply to the payment of proceeds from the disposition of shares of Nasdaq Common Stock by a non-U.S. holder through a U.S. office of a broker or through the non-U.S. office of a broker that is a U.S. person or has certain enumerated connections with the United States, unless the holder has provided the required certification that it is a non-U.S. holder and the payor does not have actual knowledge (or reason to know) that the holder is a U.S. person.

 

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Backup withholding is not an additional tax. Any amounts that are withheld under the backup withholding rules from a payment to a non-U.S. holder will be refunded or credited against the holder’s U.S. federal income tax liability, if any, provided that certain required information is furnished to the Internal Revenue Service. Non-U.S. holders should consult their tax advisors regarding the application of the information reporting and backup withholding rules to them.

Material Swedish Tax Considerations

The following is a summary of certain Swedish tax consequences related to the Offer for OMX shareholders that are residents of Sweden for tax purposes, unless otherwise stated. The summary below is not intended to be exhaustive and does not cover cases where OMX Shares or Nasdaq Common Stock are held as current assets in business operations or by a partnership. For certain categories of taxpayers (for instance, investment companies, mutual funds and non-resident persons), special tax rules may be applicable.

The tax consequences for each shareholder depend partly on the shareholder’s specific situation. Each shareholder should therefore consult a tax advisor concerning the tax consequences that the Offer may have in his or her case, including the applicability and effect of non-Swedish tax regulations, provisions of tax treaties and any other rules.

Disposal of Shares

General Information

For shareholders of OMX who accept the Offer, a taxable capital gain or a deductible capital loss generally will arise. Exceptions apply to individuals (and estates of deceased) who sell their OMX Shares in exchange for shares of Nasdaq Common Stock and limited liability companies which elect deferral of taxation. See further below concerning “—Individuals—Roll-over Relief” and “—Limited Liability Companies—Deferred Capital Gains Taxation.”

A capital gain or a capital loss will be calculated as the difference between the sales price (minus sales expenses) and the tax base (acquisition value) of the shares disposed of. Under the share exchange alternative according to the Offer, the sale price is the fair market value of the shares of Nasdaq Common Stock received at the time of the disposal.

Nasdaq intends to apply to the Swedish Tax Agency for a general advisory in order to have the sale price and acquisition cost ascertained. Information regarding the Tax Agency’s general advisory will be provided by advertisement in the Swedish daily press, the Tax Agency’s website (www.skatteverket.se) and/or in any other way that Nasdaq deems suitable.

The tax base is calculated according to the average method, which means that the acquisition value per share is regarded as being the tax base value for all shares of the same class and type, adjusted for changes in the holding that have occurred. Since the OMX Shares are listed, the acquisition value may, as an alternative, be determined as 20% of the net sales proceeds in accordance with the so-called standard method.

The time for the disposal occurs when a legally binding agreement exists between the parties.

Individuals and Estate of Deceased

For individuals (and Swedish estates of deceased), capital gains are taxed as capital income at a rate of 30%. In the case of roll-over relief on the share exchange, no capital gains taxation will occur. See below concerning “—Individuals—Roll-over Relief.”

 

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A capital loss is deductible against capital gain income and other income from capital (e.g. interest, dividends). A capital loss on listed shares may be fully offset against taxable capital gains on listed shares and other listed securities that are taxed as shares (except units in Swedish mutual funds containing only receivables denominated in the Swedish currency, known in Sweden as “räntefonder”) as well as against taxable capital gains on shares that are not listed. Seventy percent of a loss in excess of such gain will be deductible from other “income from capital” (e.g. interest, dividends).

If a net loss should arise in the capital income category in a given year, such net loss may reduce the tax on income from employment and business operations as well as property tax. This tax reduction is granted at 30% of the net loss that does not exceed SEK 100,000 and at 21% of any exceeding net loss. A net capital loss or a tax reduction may not be saved until a later tax year.

Limited Liability Companies

Limited liability companies are taxed for capital gains as business income at a rate of 28%. See below concerning “—Limited Liability Companies—Deferred Capital Gains Taxation.”

Capital losses on shares may be offset only against capital gains on shares and other securities that are taxed as shares. If a capital loss cannot be deducted by the company that has realized the loss, it may be deducted in the same year against another company’s capital gains on shares and other securities that are taxed as shares, provided these companies are eligible to consolidate for tax purposes by means of group contributions. A net capital loss on shares may be carried forward and be offset against capital gains on shares and other securities that are taxed as shares during subsequent tax years without any limitation in time.

For limited liability companies, capital gains on shares that are held for business purposes are tax-exempt and capital losses on such shares are non-deductible. Listed shares are considered held for business purposes provided that the holding represents at least 10% of the voting rights or if it can be established that the shares are held for business reasons, but only if the shares have been held consecutively for at least one year. This also means that losses on shares that do not fulfill this holding requirement are deductible, subject to the above restrictions.

When determining the holding period for shares of the same type and class that have been acquired at different dates, shares acquired on a later date are considered to have been sold prior to shares acquired earlier according to a “last-in-first-out” principle. When applying the average method, shares that have been held for one year or more are not considered to be of the same type and class.

Exchange of Shares

Individuals—Roll-over Relief

For a Swedish tax resident individual (or a Swedish estate of deceased) that accepts the Offer and thereby exchanges his or her OMX Shares for shares of Nasdaq Common Stock, no taxable capital gain or deductible capital loss is realized where the individual qualifies for roll-over relief. This requires that the individual is a tax resident of Sweden due to having his or her private residence (Sw: bostad) in Sweden or due to his or her consecutive stay (Sw: stadigvarande vistelse) in Sweden. It should be noted that the roll-over relief is not available to individuals that are a tax resident of Sweden due to so-called essential connection (Sw: väsentlig anknytning) to Sweden.

The shares of Nasdaq Common Stock received are considered to have been acquired for the same tax base as applicable to the divested OMX Shares; see also below “—The Mix and Match Facility.” The exchange of shares will normally not be declared in the tax return.

 

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Holders of OMX Shares will not receive fractions of shares of Nasdaq Common Stock. Instead, these fractions will be sold on behalf of the shareholder. The sale of the fraction of a share of Nasdaq Common Stock will be subject to capital gain taxation.

In order for the rules for roll-over relief to apply, amongst other things, it is required that Nasdaq will own more than 50% of the voting power of OMX at the end of the calendar year when the disposal takes place. Provided that the Offer is completed, Nasdaq intends to hold shares in OMX in such manner that this requirement will be met. In addition, it is possible that Nasdaq may obtain from the Swedish Board for Advance Tax Rulings a confirmation that roll-over relief will apply regardless of whether the 50% voting power requirement is met. If so, Nasdaq may deviate from this requirement.

If an individual moves out of Sweden to a country which is not a member of the European Economic Area, the capital gain that arose from the share exchange will become taxable.

Limited Liability Companies—Deferred Capital Gains Taxation

If a limited liability company that exchanges OMX Shares for shares of Nasdaq Common Stock under the Offer realizes a taxable capital gain, a tax deferral, if desired, for such gain may be claimed in the tax return if certain conditions are met.

In order for the deferral provision to apply it is necessary, among other things, that Nasdaq own more than 50% of the voting power of OMX at the end of the calendar year when the disposal takes place. Provided that the Offer is completed, Nasdaq intends to hold shares in OMX in such manner that this requirement will be met unless the Swedish Board for Advance Tax Rulings has confirmed that the rules for deferred capital gains will apply even if the holding requirement is not met and this ruling has become binding. Moreover, it is required that the cash consideration received for the shares does not exceed the capital gain realized.

Shareholders who wish to obtain a deferral of taxation must report the gain in their tax return for the divestment year and request a deferral of taxation. If a deferral is granted, the capital gain will be determined by the local tax agency in its tax assessment, in the form of a deferred tax amount, which must be allocated among the shares of Nasdaq Common Stock received.

If a tax deferral is granted, the deferred capital gain amount will be taxable at the latest when the shares of Nasdaq Common Stock are transferred to a new owner or when the shares cease to exist. However, this will not apply if the shares received are divested through a subsequent share exchange that qualifies for the tax deferral to continue. The deferred capital gain amount may also become taxable should the shareholder so desire by stating this in its tax return in any future tax year.

The Mix and Match Facility

Individuals

Any capital gain on shares sold for cash will be subject to immediate capital gains taxation. The capital gain is calculated as the difference between the cash proceeds, after deduction for sales expenses, and the acquisition cost for the shares divested for cash. See also above “—Disposal of Shares—Individuals and Estates of Deceased.”

Shares that are exchanged for shares will not give rise to any immediate capital gains taxation. The acquisition cost attributable to such shares will form the tax basis for the shares received. See also above “—Exchange of Shares—Individuals—Roll-over Relief.”

 

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Limited Liability Companies

Any capital gain on shares sold for cash will be subject to immediate capital gains taxation. The capital gain is calculated as above. See also above “—Disposal of Shares—Limited Liability Companies.”

Any tax on capital gain attributable to shares exchanged for shares will, on request of the shareholder, be deferred. See also above “—Disposal of Shares—Limited Liability Companies—Deferred Capital Gains Taxation.”

The tax base for held OMX Shares will be divided between shares divested for cash and shares exchanged for shares of Nasdaq Common Stock. This can be illustrated with the following example. A Shareholder owns 100 OMX Shares. He accepts the “Basic Alternative.” Hence, he will receive cash in exchange for 45 OMX Shares and new shares of Nasdaq Common Stock for 55 OMX Shares tendered. The tax base is assumed to be SEK 15,000. Of such total tax base, SEK 6,750 (0.45 multiplied by 15,000) must be used as the tax base for the shares divested for cash. The remaining tax base will be attributable to the exchange of shares.

Holding of Shares of Nasdaq Common Stock By Swedish Residents

Cash Dividends

A distribution paid by Nasdaq will be treated as a dividend for United States federal income tax purposes to the extent of Nasdaq’s current or accumulated “earnings and profits” (as determined under the Internal Revenue Code). Nasdaq generally will be required to withhold United States federal income tax at a rate of 30% on the gross amount of any dividend paid to a shareholder who is a resident of Sweden. However, the rate of United States withholding tax generally is reduced to 15% if the shareholder is entitled to the benefits of the Sweden-United States income tax treaty and complies with certain certification requirements (generally by completing and delivering an IRS Form W-8BEN to Nasdaq).

The gross dividend is also taxable in Sweden as income from capital at a 30% rate for individuals and as income from business operations at a rate of 28% for corporations.

A credit for U.S. withholding tax must be requested in the Swedish tax return. If a tax credit for foreign withholding tax cannot be utilized in a given year, the credit may be carried forward and be utilized in any of the following three years. Alternatively, the withholding tax may be deducted as an expense (rather than a credit) when the taxable income of the shareholder is computed. Individuals (and estate of deceased) should make the deduction under the category “income from capital” and corporations under the category “income from business operations.”

Net Wealth Taxation

The shares of Nasdaq Common Stock are listed on the Nasdaq Global Select Market which means that they are subject to Swedish net wealth tax. The Swedish Government, however, has announced that it will abolish the Swedish net wealth tax in 2007.

Disposal of Shares of Nasdaq Common Stock Received in the Offer

Individuals

When a shareholder disposes of the shares of Nasdaq Common Stock received under the Offer, a taxable capital gain or a deductible capital loss will arise. If the rules for roll-over relief have been applied in conjunction with the Offer, the shares of Nasdaq Common Stock received are regarded as having been acquired for the same tax base as applicable to the divested OMX Shares.

 

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Limited Liability Companies

For limited liability companies, the shares of Nasdaq Common Stock received are considered, for tax purposes, to have been acquired at the fair market value at the time of acquisition, whether a deferral has been granted or not. Nasdaq intends to seek General Advisory with the tax authorities to have the sales price and acquisition value ascertained.

If a deferral has been granted as described above, the deferred capital gain amount will also become taxable after disposal of the shares of Nasdaq Common Stock received due to the share exchange.

If a deferral is granted and the seller, on the date of the share exchange, owned shares of the same class and type as the shares of Nasdaq Common Stock received, or acquires such shares after the exchange, the shares of Nasdaq Common Stock will be deemed to have been disposed of in the following order: (1) shares acquired prior the Offer, (2) shares acquired through the Offer, (3) shares acquired after the Offer.

Certain Tax Issues for Shareholders Resident Outside of Sweden

Shareholders not resident in Sweden for tax purposes will normally not be liable for capital gains taxation in Sweden upon disposal of shares. However, see below concerning certain exceptions. Such shareholders may, however, be liable for tax in their country of residence.

Individuals not resident in Sweden for tax purposes may be liable for capital gains taxation in Sweden upon disposal of Swedish shares if they have been resident in Sweden due to having private residence (Sw: bostad) in Sweden or due to a consecutive stay (Sw: stadigvarande vistelse) in Sweden at any time during the year of disposal or the ten calendar years preceding the disposal. This right of taxation may, however, be limited by an applicable tax treaty.

A corporation not resident in Sweden may be subject to capital gains taxation in Sweden upon disposal of shares if the corporation has a permanent establishment or fixed base in Sweden to which these shares are effectively connected.

Anticipated Accounting Treatment of the Offer

The acquisition of OMX Shares by Nasdaq in the Offer (and in any subsequent transaction such as compulsory acquisition proceedings) will be accounted for under the purchase method of accounting in accordance with U.S. GAAP. From the date of the completion of the Offer, the combined company’s results of operations will include OMX’s operating results and OMX’s assets and liabilities, including identifiable intangible assets, at fair value with the excess allocated to goodwill.

Appraisal Rights

Under Delaware law and our Restated Certificate of Incorporation, Nasdaq shareholders are not entitled to any rights to seek appraisal of their Nasdaq Common Stock or to exercise any preemptive rights in connection with the proposals to approve the Charter Amendment or the Share Issuance. Under Swedish law and OMX’s Articles of Association, OMX shareholders are not entitled to any rights to seek appraisal of their OMX Shares or to exercise any preemptive rights in connection with the Offer, though certain related rights exist in connection with the compulsory acquisition proceedings described under “Terms of the Offer—Special Considerations.”

Restrictions on Sales of Nasdaq Common Stock Received by OMX Affiliates

All shares of Nasdaq Common Stock issued in connection with the Offer will be freely transferable unless you are considered an “affiliate” of either OMX or Nasdaq (as such term is defined in the Securities Act), in which case you will be permitted to sell the shares of Nasdaq Common Stock you receive in the Offer only pursuant to an effective registration statement or an exemption from the registration requirements of the Securities Act. This Proxy Statement/Prospectus does not register the resale of stock held by affiliates.

 

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Financing of the Offer

To finance the Offer, Nasdaq entered into an Interim Loan Agreement, dated August 1, 2007, by and among Nasdaq, as Borrower, the financial institutions that are or may from time to time become parties thereto as Lenders, and Bank of America, N.A., as Administrative Agent, Banc of America Securities LLC and J.P. Morgan Securities Inc., as Joint Lead Arrangers and Joint Bookrunners, and JPMorgan Chase Bank N.A., as Syndication Agent.

The Offer is not subject to any conditions concerning the availability of financing and the Interim Loan Agreement will provide Nasdaq with the certainty of funds necessary to complete the Offer. However, any drawdown pursuant to the Interim Loan Agreement is subject to:

 

   

conditions to the completion of the Offer being satisfied in all material respects in accordance with the Transaction Agreement without any waiver by the Borrower that is materially adverse to the lenders (unless the Administrative Agent and the Syndication Agent consent to such waiver, such consent not to be unreasonably withheld); and

 

   

the Offer being accepted such that the Borrower becomes the owner of shares representing more than 90% of the outstanding OMX Shares on a fully diluted basis.

Otherwise, the Interim Loan Agreement does not include any conditions relating to OMX or its business and is subject only to conditions which Nasdaq and its shareholders in practice control, including:

 

   

solvency of Nasdaq and its subsidiaries on a consolidated basis;

 

   

delivery of customary closing documentation including board resolutions, legal opinions and Uniform Commercial Code filings; and

 

   

payment of fees and expenses of the Lenders.

Pursuant to the Interim Loan Agreement, Nasdaq may borrow up to $3,370,000,000 to pay for OMX Shares exchanged in the Offer, transaction costs related to the Offer, and to repay Nasdaq bank indebtedness under its existing credit facilities as well as certain existing indebtedness of OMX. Loans made pursuant to the Interim Loan Agreement will be made on the date that the conditions to drawdown are satisfied and will mature thirty business days thereafter.

The interest rate on loans made under the Interim Loan Agreement will be, at Nasdaq’s option, either:

 

 

 

the higher of (a) the federal funds rate plus  1/2 of 1% and (b) the rate of interest in effect for such day as publicly announced from time to time by the Administrative Agent as its “prime rate”, plus, in either case, 0.75% per annum; or

 

   

the rate per annum equal to the British Bankers Association LIBOR Rate, plus 1.75% per annum.

Loans made under the Interim Loan Agreement will refinance in full both Nasdaq’s existing credit agreement, dated as of April 11, 2006 and amended and restated as of May 19, 2006, among Nasdaq, as Borrower, the financial institutions that are or may from time to time become parties thereto as Lenders, Bank of America, N.A., as Administrative Agent, Swingline Lender and Issuing Bank, and Banc of America Securities LLC, as Sole Lead Arranger and Sole Book Manager (including amounts borrowed under the incremental facility amendment described below), and Nasdaq’s existing term loan credit agreement, dated as of April 11, 2006 and amended and restated as of May 19, 2006, among Nasdaq, as Borrower, Nightingale Acquisition Limited, as Additional Borrower, the financial institutions that are or may from time to time become parties thereto as Lenders, Banc of America Bridge LLC, as Administrative Agent, and Banc of America Securities LLC, as Sole Lead Arranger and Sole Book Manager.

Nasdaq’s obligations under the Interim Loan Agreement will be guaranteed by all of its material U.S. domestic subsidiaries, excluding the regulated broker-dealer subsidiaries, the insurance-related subsidiaries and certain other subsidiaries. Nasdaq’s obligations under the Interim Loan Agreement and the subsidiary guarantees will be secured by a security interest in and liens upon substantially all of the assets of Nasdaq and the subsidiary

 

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guarantors, excluding the regulated broker-dealer subsidiaries, the insurance-related subsidiaries and certain other subsidiaries. Subject to certain exceptions, the shares of each of Nasdaq’s subsidiaries will be pledged, provided that no more than 65% of the voting shares of any foreign subsidiary will be pledged, and the shares of subsidiaries that are not directly owned by Nasdaq or any of its subsidiary guarantors will not be pledged.

The Interim Loan Agreement contains a covenant, which we refer to as the Offer Covenant, which requires Nasdaq to give notice to the Administrative Agent if at any time the Offer is terminated or withdrawn without being successful. Immediately following such termination or withdrawal, all commitments of the Lenders under the Interim Loan Agreement shall be cancelled and the Lenders shall be under no further obligation to extend credit thereunder.

The Interim Loan Agreement also contains:

 

   

customary affirmative covenants, including delivery of financial statements, notice of material events and defaults, maintenance of existence, properties and insurance, compliance with laws and limitations on use of proceeds;

 

   

customary events of default; and

 

   

an event of default upon the Borrower’s failure to comply with the Offer Covenant.

The Interim Loan Agreement permits Nasdaq to repay borrowings thereunder at any time in whole or in part. The Interim Loan Agreement will provide Nasdaq with the certainty of funds necessary to complete the Offer.

In addition, Nasdaq has executed a Commitment Letter, dated May 24, 2007, delivered by Bank of America, N.A., Banc of America Securities LLC, J.P. Morgan Securities Inc. and JPMorgan Chase Bank, N.A., including a Summary of Terms and Conditions, which, together with any amendments thereto, we refer to as the Commitment Letter. In accordance with the Commitment Letter, Nasdaq anticipates that it will enter into new credit agreements to replace the Interim Loan Agreement prior to the consummation of the Offer, which new credit agreements will have similar terms and conditions to drawdown as those under the Interim Loan Agreement.

Regulatory Matters

The completion of the Offer is conditioned upon Nasdaq obtaining certain regulatory approvals. In addition, certain regulatory filings are required to be made in connection with the Offer. These approvals and filings include:

 

   

prior approval by the SFSA of the indirect acquisition of the OMX Nordic Exchange Stockholm AB (Sw: Stockholmsbörsen AB) and OMX Broker Services AB pursuant to chapter 11 section 2a of the Securities Exchange and Clearing Operations Act (1992:543) and chapter 6 section 3a of the Securities Operations Act (1991:981), which was requested on July 3, 2007;

 

   

prior approval by the Danish Financial Supervisory Authority (Da: Finanstilsynet) of the indirect acquisition of the Copenhagen Stock Exchange (Da: Københavns Fondsbørs A/S) (now called the OMX Nordic Exchange Copenhagen A/S) pursuant to Sections 7 and 10 in the Act on Securities Trading etc, which was requested on July 3, 2007;

 

   

notification to the Finnish Financial Supervision Authority (Fi: Rahoitustarkastus) of the indirect acquisition of the Helsinki Stock Exchange (Fi: Helsingin Pörssi Oy) (now called the OMX Nordic Exchange Helsinki Ltd.) pursuant to chapter 3, section 2 d and chapter 4 a, section 3 a of the Securities Markets Act and chapter 2, section 3 a of the Act on Trading in Standardized Options and Futures, which was made on June 29, 2007;

 

   

notification to the Icelandic Financial Supervisory Authority (Is: Fjármálâeftirlitið) of the indirect acquisition of the Iceland Stock Exchange (Is: Kauphöll Íslands hf.) (now called the OMX Nordic

 

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Exchange Iceland) and the Icelandic Securities Depository (Is: Verðbréfaskráning Íslands hf.) pursuant to article 6 of Act no 34/1998 on Activities of Stock Exchanges and Regulated OTC Markets and article 5 of Act no 131/1997 on Electronic Registration of Title to Securities, which was made on July 2, 2007;

 

   

prior approval by the Estonian Financial Supervisory Authority (Et: Finantsinspektsioon) of the indirect acquisition of the Estonian Central Register of Securities (Et: AS Eesti Väärtpaberikeskus) pursuant to article 28 (3) and (5) of the Estonian Central Register of Securities Act and the Regulation of the Minister of Finance No. 21, dated February 2, 2001 “Procedure of applying for and review of approval for acquiring qualifying holding in the registrar,” which was requested on July 3, 2007 and granted on August 2, 2007;

 

   

prior approval by the Latvian Financial and Capital Market Commission (Lv: Finansu un kapitāla tirgus komisija) of the indirect acquisition of the Riga Stock Exchange (Lv: Rigas Fondu birza) and the Latvian Central Securities Depository (Lv: Latvijas Centrālais depozitārijs) pursuant to part one and two of article 9, part one and two of article 11 and part one and two of article 12 of the Law on Financial Instruments Market, which was requested on June 26, 2007; and

 

   

prior approval by the Lithuanian Securities Commission (Lt: Lietuvos Respublikos vertybiniu popieriu komisija) of the indirect acquisition of the Vilnius Stock Exchange (Lt: Vilniaus vertybiniu popieriu birza) and the Lithuanian Central Securities Depository (Lt: Lietuvos Centrinis Vertybiniu Popieriu Depozitoriumas) pursuant to article 51 of the Law on Markets of Financial Instruments, which was requested on July 3, 2007.

In addition, prior approval by the S.E.C. is required in order to allow up to 12% of Nasdaq’s voting power owned by the Voting Agreement Parties to be voted in accordance with the Voting Agreements.

In addition to this Proxy Statement/Prospectus, an offer document and prospectus has been prepared in accordance with the Takeover Rules, the Swedish Financial Instruments Trading Act (Sw: lagen (1991:980) om handel med finansiella instrument) and the Commission Regulation (EC) No 809/2004 of April 29, 2004 implementing Directive 2003/71/EC of the European Parliament and the Council. This offer document and prospectus has been registered by the Swedish Financial Supervisory Authority (Sw: Finansinspektionen) in accordance with the Swedish Financial Instruments Trading Act.

Principal Agreements

The descriptions of the agreements set forth in this section are summaries only and are qualified in their entirety by reference to the complete form of agreements attached to this Proxy Statement/Prospectus as Annexes A through C. Readers of this Proxy Statement/Prospectus should not view the existence of a representation and warranty, or the description of it in this Proxy Statement/Prospectus, as a representation to the readers of this Proxy Statement/Prospectus that all facts are as represented and warranted.

Transaction Agreement

The Transaction Agreement provides that the Offer is subject to satisfaction of the conditions set forth in the press release issued by Nasdaq and OMX on May 25, 2007. A description of those conditions, Nasdaq’s ability to withdraw the Offer in the event any Offer condition is not fulfilled or cannot be fulfilled and Nasdaq’s ability to waive any Offer condition are set forth under “Terms of the Offer—Conditions to the Offer” below.

Pursuant to the Transaction Agreement, each of Nasdaq and OMX has agreed that it will not, among other things:

 

   

solicit, initiate, encourage, induce or facilitate an alternative acquisition proposal for itself;

 

   

furnish information regarding itself to a third party in connection with or in response to an alternative acquisition proposal or an inquiry or indication of interest that could reasonably be expected to lead to an alternative acquisition proposal; or

 

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engage in any discussions or negotiations with any third party with respect to an alternative acquisition proposal

unless, in the case of the second and third bullets above, a party receives a bona fide unsolicited written alternative acquisition proposal and:

 

   

such party and its representatives have not violated any of the non-solicitation provisions in the Transaction Agreement;

 

   

a majority of such party’s board (after consultation with its financial advisors and outside legal counsel) determines that such proposal is or is reasonably likely to result in a superior proposal to the transactions contemplated by the Transaction Agreement; and

 

   

such party’s board concludes, after consultation with its financial advisors and outside legal counsel, that a failure to take such action would reasonably be likely to be inconsistent with the party’s board’s fiduciary obligations to its shareholders.

Pursuant to the Transaction Agreement, the recommendation by OMX’s Board of Directors of the Offer may only be withdrawn or substantially changed if:

 

   

OMX has complied in all material respects with the non-solicitation provisions in the Transaction Agreement and a superior proposal to the Offer is made;

 

   

a material adverse change has occurred with respect to Nasdaq; or

 

   

information made public by Nasdaq or disclosed by Nasdaq to OMX is materially inaccurate, incomplete or misleading, or Nasdaq has failed to make public any material information which should have been made public by it,

and in any such case OMX’s Board of Directors determines, after consultation with financial advisors and outside legal counsel, that not withdrawing or changing its recommendation of the Offer would reasonably be likely to be inconsistent with OMX’s Board of Directors’ fiduciary obligations to its shareholders.

Pursuant to the Transaction Agreement, the recommendation of Nasdaq’s Board of Directors that holders of Nasdaq Voting Securities approve the issuance of the Nasdaq Common Stock in connection with the Offer may only be withdrawn or substantially changed if a material adverse change has occurred with respect to OMX, and as a result Nasdaq’s Board of Directors determines, after consultation with its outside financial and legal advisors, that not withdrawing or changing its recommendation would reasonably be likely to be inconsistent with Nasdaq’s Board of Directors’ fiduciary obligations to its shareholders.

Pursuant to the Transaction Agreement, upon completion of the Offer, the name of the combined company will be changed to “The NASDAQ OMX Group, Inc.,” subject to approval by Nasdaq’s shareholders of an amendment to Nasdaq’s Restated Certificate of Incorporation to approve such change of name. Upon completion of the Offer, Nasdaq’s Board of Directors will consist of fifteen directors, comprised of nine individuals from (or nominated by) Nasdaq’s Board of Directors as of immediately prior to completion of the Offer, Nasdaq’s Chief Executive Officer and five individuals from (or proposed for nomination by) OMX’s Board of Directors as of immediately prior to completion of the Offer. With respect to the individuals from (or proposed for nomination by) OMX’s Board of Directors, such individuals must be reasonably acceptable to Nasdaq and four of such individuals must be “independent” for purposes of Nasdaq’s director independence standards. Upon completion of the Offer, Nasdaq’s Chief Executive Officer (currently Robert Greifeld) will serve as Chief Executive Officer of the combined company and OMX’s Chief Executive Officer (currently Magnus Böcker) will serve as President of the combined company.

Pursuant to the Transaction Agreement, the Chairman of the combined company will represent the global span of the combined Nasdaq and OMX. Nasdaq and OMX will utilize Nasdaq’s recruitment tool “BoardRecruiting.com” and a well-reputed search firm to identify internal and external candidates, it being the

 

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belief of Nasdaq and OMX that the appropriate size of Nasdaq’s Board of Directors is 15 directors. OMX and Nasdaq will each have the right to nominate candidates for Chairman. The Deputy Chairman of Nasdaq’s Board of Directors will for the two years following the completion of the Offer be one of the five individuals from (or proposed for nomination by) OMX’s Board of Directors as of immediately prior to the completion of the Offer. As of the completion of the Offer, OMX may elect to have one-third of the members of each committee of Nasdaq’s Board of Directors be selected from the directors selected from (or proposed for nomination by) OMX’s Board of Directors, subject to applicable law, regulation or stock exchange listing standard. As of the completion of the Offer, three individuals nominated by OMX will become members of the Nominating Committee of Nasdaq. The composition of the local Board of OMX Exchanges Ltd. will remain unchanged following the completion of the Offer. No changes to the governance of The NASDAQ Stock Market as a result of the completion of the Offer are anticipated.

With respect to termination, the Transaction Agreement:

 

   

may be terminated by written consent of both Nasdaq and OMX;

 

   

may be terminated by either OMX or Nasdaq if the Offer lapses or is withdrawn;

 

   

may be terminated by either OMX or Nasdaq if the Offer is not declared unconditional by February 29, 2008; and

 

   

will automatically terminate if either the recommendation of OMX’s Board of Directors (with respect to the Offer) or Nasdaq’s Board of Directors recommendation (with respect to approval of the issuance of the Nasdaq Voting Securities in connection with the Offer) is withdrawn in accordance with the Transaction Agreement.

Pursuant to the Transaction Agreement, if either party is in breach of its obligations under the Transaction Agreement (other than in immaterial respects), it must pay the other party’s costs, fees and expenses incurred in connection with the Offer up to a maximum of $15,000,000.

Pursuant to the Transaction Agreement, each of OMX and Nasdaq have agreed, among other things, not to acquire any shares or other securities in the other until the earlier of:

 

   

nine months following termination of the Transaction Agreement;

 

   

December 31, 2008; or

 

   

the completion of the Offer.

The above restriction does not apply to the Offer itself.

Irrevocable Undertakings

Investor AB, Nordea Bank AB and Magnus Böcker, which we refer to as the Irrevocable Undertakings Parties, which own in the aggregate 19,094,698 OMX Shares, representing approximately 16.6% of the outstanding OMX Shares, have each entered into irrevocable undertakings with Nasdaq, pursuant to which each Irrevocable Undertakings Party has agreed to:

 

   

accept the Offer and tender all of its shares in the Offer immediately prior to, but conditioned upon, the Offer being declared unconditional;

 

   

elect to receive shares of Nasdaq Common Stock in the Offer if the Offer includes a mix and match facility which has an equalizing mechanism designed to achieve substantially similar value between the offered alternatives (see “Terms of the Offer—Mix and Match Facility” for a description of the Mix and Match Facility of the Offer which satisfies this requirement); and

 

   

support Nasdaq to a reasonable extent and where capable of doing so (including by exercising voting rights) in Nasdaq’s implementation of the Offer and oppose the taking of any action which may prejudice or frustrate the Offer.

 

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Additionally, each Irrevocable Undertakings Party has agreed not to:

 

   

offer, sell, transfer, charge, pledge or grant any option over or otherwise dispose of any of its OMX Shares, whether directly or indirectly, except to Nasdaq under the Offer;

 

   

accept any other offer in respect of any of its OMX Shares;

 

   

directly or indirectly solicit proposals or offers from third parties for the acquisition of all shares in OMX;

 

   

propose or vote in favor of any resolution for payment of dividends or other value distributions by OMX (whether in cash or otherwise and whether to the shareholders of OMX or to a third party), or propose or vote in favor of any other resolution, or take any action or make any statement, which could prejudice or frustrate the Offer; or

 

   

withdraw its acceptance of the Offer.

Each Irrevocable Undertaking will automatically terminate under certain circumstances, including if:

 

   

the Offer is not declared unconditional before December 15, 2007;

 

   

a material adverse change has occurred with respect to Nasdaq;

 

   

the recommendation of the Offer by OMX’s Board of Directors is withdrawn;

 

   

prior to the Offer being declared unconditional, a bona fide unsolicited third party public offer is made for all of the OMX Shares which corresponds to an offer value in SEK equal to or exceeding SEK 220 per OMX Share; or

 

   

prior to the Offer being declared unconditional, the value of the Offer, as accepted by the Irrevocable Undertakings Parties, would equate to less than SEK 190 per share during a period of 15 consecutive trading days, based upon the volume weighted average price of Nasdaq Voting Securities during such period.

Pursuant to the Irrevocable Undertakings, Nasdaq has agreed to certain restrictions on its ability to transfer OMX Shares acquired from the Irrevocable Undertakings Parties for a period of nine months following the completion of the Offer.

Voting Agreements

In connection with the Offer, the Voting Agreement Parties have each entered into Voting Agreements with OMX, pursuant to which each Voting Agreement Party has agreed to:

 

   

vote those Nasdaq Voting Securities covered by the Voting Agreement in favor of the issuance of the Nasdaq Voting Securities in connection with the Offer and any other matter submitted to Nasdaq shareholders in connection with the Transaction Agreement; and

 

   

vote those Nasdaq Voting Securities covered by the Voting Agreement against any and all actions that OMX advises such Voting Agreement Party would reasonably likely delay, prevent or frustrate the transactions contemplated by the Transaction Agreement or the satisfaction of any of the conditions set forth in the Offer.

Each Voting Agreement will automatically terminate under certain circumstances, including if

 

   

the Transaction Agreement is terminated;

 

   

all of the securities subject to the Voting Agreement are transferred; or

 

   

the terms of the Offer are amended in a way that is adverse to Nasdaq’s security holders, without the Voting Agreement Party’s written consent.

 

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The Voting Agreements do not restrict the transfer by the Voting Agreement Parties of their Nasdaq securities.

Pursuant to Nasdaq’s governing documents, Nasdaq’s Board of Directors has approved the submission of an application to the S.E.C. seeking to allow up to 12% of Nasdaq’s voting power owned by the Voting Agreement Parties to be voted in accordance with the Voting Agreements. The Voting Agreements will not be legally effective until the time, if any, as such approval is granted.

Directors and Management of the Combined Company Following the Completion of the Offer

Upon completion of the Offer, the combined company’s board of directors will consist of fifteen directors, comprised of nine individuals from (or nominated by) Nasdaq’s Board of Directors as of immediately prior to completion of the Offer, Nasdaq’s Chief Executive Officer and five individuals from (or proposed for nomination by) OMX’s Board of Directors as of immediately prior to completion of the Offer. With respect to the individuals from (or proposed for nomination by) OMX’s Board of Directors, such individuals must be reasonably acceptable to Nasdaq and four of such individuals must be “independent” for purposes of Nasdaq’s director independence standards.

The Chairman of the combined company will represent the global span of the combined Nasdaq and OMX. The combined company will utilize Nasdaq’s recruitment tool “BoardRecruiting.com” and a well-reputed search firm to identify internal and external candidates, it being the belief of Nasdaq and OMX that the appropriate size of Nasdaq’s Board of Directors is 15 directors. OMX and Nasdaq will each have the right to nominate candidates for Chairman. The Deputy Chairman of the combined company’s board of directors will for the two years following the completion of the Offer be one of the five individuals from (or proposed for nomination by) OMX’s Board of Directors as of immediately prior to the completion of the Offer. As of the completion of the Offer, OMX may elect to have one-third of the members of each committee of the combined company’s board of directors be selected from the directors selected from (or proposed for nomination by) OMX’s Board of Directors, subject to applicable law, regulation or stock exchange listing standard. As of the completion of the Offer, three individuals nominated by OMX will become members of the Nominating Committee of the combined company.

The new directors will receive compensation as members of the combined company’s board of directors, consistent with Nasdaq’s policy to pay compensation to non-employee directors for their services as board members. For the period May 2006 to May 2007, Nasdaq’s non-employee directors received an annual retainer fee of $50,000 per year, payable in cash, equity or a combination of both, and an annual equity award valued at $50,000, in both cases payable in quarterly installments. Nasdaq’s chairman and the chairman of each committee of the Board of Directors received additional payments in recognition of their service.

Upon completion of the Offer, Nasdaq’s Chief Executive Officer (currently Robert Greifeld) will serve as Chief Executive Officer of the combined company and OMX’s Chief Executive Officer (currently Magnus Böcker) will serve as President of the combined company.

Information concerning directors and officers of Nasdaq and Nasdaq executive compensation is contained in Nasdaq’s Annual Report on Form 10-K for the fiscal year ended December 31, 2006 and Nasdaq’s Proxy Statement for its 2007 Meeting of Shareholders, and is incorporated herein by reference; see the section entitled “Where You Can Find More Information” on page 210.

Information concerning directors of OMX and certain relationships and related transactions is discussed in the section entitled “Information About OMX” on page 105.

 

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TERMS OF THE OFFER

The Offer consists of a mixture of cash and new Nasdaq Common Stock as consideration. Nasdaq is offering each OMX shareholder the Basic Alternative, which is:

 

   

In respect of 45.32% of the total number of OMX Shares tendered by such shareholder, SEK 208.1 per OMX Share in cash; and

 

   

In respect of the remaining 54.68% of the number of OMX Shares tendered by such shareholder, 0.918 new shares of Nasdaq Common Stock per OMX Share.

As an alternative, OMX shareholders who on May 31, 2007 were registered in the register of shareholders kept by the Swedish VPC AB, the Danish Værdipapircentralen A/S, the Finnish Suomen Arvopaperikeskus Oy and the Icelandic Verðbréfaskráning Íslands hf. as holders of 200 or fewer OMX Shares and who accept the Offer are entitled to elect to receive the Cash Guarantee of SEK 208.1 per OMX Share as consideration for their entire holding (and not parts of their holding) of OMX Shares. For the avoidance of doubt, if such OMX shareholders acquire additional OMX Shares after May 31, 2007, these shareholders will not be entitled to elect to receive the Cash Guarantee with respect to the additional OMX Shares so acquired. Only OMX shareholders which are directly registered or registered in the name of an authorized nominee in accordance with the Swedish Act (1998:1479) on Record-Keeping of Financial Instruments, which we refer to as an Authorized Nominee, will be offered the Cash Guarantee. An OMX shareholder who holds shares through other nominees or custodians, which we refer to as an Unauthorized Nominee, will not be given any direct right to elect to receive the Cash Guarantee, even if such Unauthorized Nominee in turn has registered the shares in the name of a nominee who is an Authorized Nominee, and are referred to the right that its Unauthorized Nominee may have under the Cash Guarantee.

Nasdaq is also offering OMX shareholders who accept the Offer prior to the Offer being declared unconditional the opportunity to participate in the Mix and Match Facility described below.

Regardless of whether an OMX shareholder receives consideration under the Basic Alternative or through the Mix and Match Facility, only whole numbers of shares will be accepted as valid tenders for the Cash Consideration and Share Consideration.