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Transactions

July 2010
Sydney, Australia
has been acquired by
New York, New York


Background

SMARTS Group, a fast growing, privately owned company based in Sydney, Australia, is a global leader in providing market surveillance technology for stock, bond, commodity and derivatives exchanges; national regulators; and securities brokerage firms around the world. The company’s products allow exchanges, regulators, brokers and others to detect patterns that may suggest insider trading and other forms of market manipulation.  Their proprietary technology allows these users to collect massive amounts of trading-related data from disparate sources, and analyze that data in real time using sophisticated data mining and data visualization tools.  At the time of the transaction, twenty-two of the world’s securities exchanges; seven of the world’s most sophisticated regulators; and nearly fifty of the world’s leading securities brokerage firms (“brokers”) relied on SMARTS’ technology to insure the orderly conduct of securities markets.

Over the years, SMARTS had been approached by a number of parties interested in some form of a combination or investment - venture capital and private equity players, bankers and industry participants all had indicated interest.  

Finally, the SMARTS Board concluded that they were open to a number of strategic options ranging from an IPO to a minority investment to a sale of the entire firm, if the value was above a significant threshold.  That is when they asked M&A to help them identify and evaluate these various strategic options.



Overview

M&A organized a team to fly to Sydney to manage the process.  The team worked with Management to be able to present the firm in the best light to multiple constituencies; led preparations for due-diligence reviews; identified key strengths and weaknesses, and worked with the company to strengthen those weaknesses before presenting to outside parties.  

NASDAQ OMX was a natural fit and the firm was particularly interested in SMARTS.  This interest was driven by the fact they were not only a leader in operating securities exchanges around the world, but they were also a leader in the provision of exchange technology to other exchanges around the world.  Since they were already utilizing SMARTS technology, they foresaw the need for all exchanges which made the pursuit very compelling. 

Approximately seven  months after engaging Marlin & Associates, SMARTS Group agreed to be acquired by NASDAQ OMX. The company will continue to be based in Sydney where it will be central to NASDAQ OMX's strategy to diversify its commercial technology business and enter the broker surveillance and compliance market. SMARTS is now part of the NASDAQ OMX Market Technology business, which is based in Sweden and delivers technology to over 70 marketplaces in more than 50 countries.    

M&A Role

Marlin & Associates managed the process, assisted in the negotiations and acted as exclusive strategic and financial advisor to SMARTS Group.

Press

NASDAQ OMX Acquires SMARTS

July 27, 2010

NASDAQ OMX Acquires SMARTS

NEW YORK and SYDNEY, Australia, Jul 27, 2010 (GlobeNewswire via COMTEX News Network) -- The NASDAQ OMX Group, Inc. (Nasdaq:NDAQ) has signed an agreement to acquire SMARTS Group, the world-leading technology provider of market surveillance solutions to exchanges, regulators and brokers.

This acquisition is part of NASDAQ OMX's strategy to diversify its commercial technology business and enter the broker surveillance and compliance market. SMARTS will be part of the NASDAQ OMX Market Technology business, which delivers technology to over 70 marketplaces in more than 50 countries.

Under the agreement NASDAQ OMX will acquire 100 percent of the shares in privately held SMARTS Group Holdings. The transaction is expected to be concluded within Q3 2010.

Financial terms of the transaction were not disclosed. Marlin & Associates acted as exclusive financial and strategic advisor to SMARTS.

Australia-based SMARTS has set the benchmark for surveillance systems, with the most proven and widely adopted surveillance solutions in the world.

Anna Ewing, Chief Information Officer of NASDAQ OMX, said, "The acquisition of SMARTS is a strategic fit with NASDAQ OMX's commercial technology business. Efficient surveillance operations are imperative to ensure integrity in today's financial markets, and SMARTS allows us to capitalize on the growing demand for surveillance technology products in exchange, regulator and broker markets worldwide. We are also excited about expanding our presence in Australia and look forward to leveraging SMARTS' center of excellence and innovation in the region."

Dr. Andreas Furche, CEO of SMARTS Group Holdings, said, "We are proud to have been chosen by NASDAQ OMX. This acquisition is recognition of the strength of our solutions, Australian innovation and the talent and professionalism of the SMARTS team. Being part of NASDAQ OMX provides enormous growth opportunities for SMARTS surveillance technologies and provides us with the direct connection to the U.S. markets that we have been seeking. Moreover, the SMARTS customer base will benefit from the added confidence of working with a world-leading company that has a similar customer base and therefore understands the business and requirements of SMARTS' customers."

About SMARTS Group

SMARTS Group is an Australian-based financial technology company with over 30 national exchange and regulatory customers as well as 50 broking firm clients in more than 30 countries. With over 130 employees, SMARTS Group is the leading provider of market surveillance solutions worldwide. SMARTS has delivered surveillance technology solutions since 1994 and in 2009 received the Australian Export Award in the information and communications technology category.

For more information about SMARTS Group visit http://www.smartsgroup.com.

About NASDAQ OMX

The NASDAQ OMX Group, Inc. is the world's largest exchange company. It delivers trading, exchange technology and public company services across six continents, with more than 3,600 listed companies. NASDAQ OMX offers multiple capital raising solutions to companies around the globe, including its U.S. listings market, NASDAQ OMX Nordic, NASDAQ OMX Baltic, NASDAQ OMX First North, and the U.S. 144A sector. The company offers trading across multiple asset classes including equities, derivatives, debt, commodities, structured products and exchange-traded funds. NASDAQ OMX technology supports the operations of over 70 exchanges, clearing organizations and central securities depositories in more than 50 countries. NASDAQ OMX Nordic and NASDAQ OMX Baltic are not legal entities but describe the common offering from NASDAQ OMX exchanges in Helsinki, Copenhagen, Stockholm, Iceland, Tallinn, Riga, and Vilnius. For more information about NASDAQ OMX, visithttp://www.nasdaqomx.com. Please follow NASDAQ OMX on Facebook (http://www.facebook.com/nasdaqomx) and Twitter (http://www.twitter.com/nasdaqomx).

Cautionary Note Regarding Forward-Looking Statements

The matters described herein contain forward-looking statements that are made under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, statements about NASDAQ OMX's products and offerings. We caution that these statements are not guarantees of future performance. Actual results may differ materially from those expressed or implied in the forward-looking statements. Forward-looking statements involve a number of risks, uncertainties or other factors beyond NASDAQ OMX's control. These factors include, but are not limited to factors detailed in NASDAQ OMX's annual report on Form 10-K, and periodic reports filed with the U.S. Securities and Exchange Commission. We undertake no obligation to release any revisions to any forward-looking statements.

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