Divestiture

2018 Pending Acquisition

In September 2018, we announced that we made a SEK 75 per share and SEK 85 per warrant, or approximately $190 million (based on an exchange rate of USD 1.00 = SEK 8.96 as of September 13, 2018), all cash recommended public offer to the shareholders and warrant holders of Cinnober, a major Swedish financial technology provider to brokers, exchanges and clearinghouses worldwide. Our acquisition of Cinnober would be included in our Market Technology segment. Nasdaq expects to fund the acquisition with either cash on hand or liquidity available under existing credit facilities. The public tender offer is expected to be completed during the fourth quarter of 2018, subject to certain customary conditions.

2018 Divestiture and 2017 Acquisitions

We completed the following divestiture in 2018 and acquisitions in 2017. Financial results of each transaction are included in our Condensed Consolidated Statements of Income from the date of each divestiture or acquisition.

2018 Divestiture

In April 2018, we sold our Public Relations Solutions and Digital Media Services businesses which were part of our Corporate Solutions business to West Corporation and recognized a pre-tax net gain on the sale of $33 million, net of disposal costs ($14 million after tax), which includes a post-closing working capital adjustment of $8 million ($5 million after tax) recorded during the three months ended September 30, 2018. The total net pre-tax gain is included in net gain on divestiture of businesses in the Condensed Consolidated Statements of Income for the nine months ended September 30, 2018.

As of December 31, 2017, the assets and liabilities of the above businesses were held for sale. See Note 5, “Assets and Liabilities Held For Sale,” for further discussion.

Through a multi-year partnership with West, Nasdaq will continue to provide eligible Nasdaq-listed clients with access to public relations, webcasting and webhosting products and services as part of the terms of the transaction.

As part of the terms of the transaction, we are providing transition services to West, such as technology, finance and facilities related services for a period of time, and the compensation received for such transition services is being reflected as a reduction to the underlying expenses incurred by Nasdaq to provide such transition services.

* * * * * *

2017 Acquisitions



	Purchase Consideration		Total Net Liabilities Acquired			Total Net Deferred Tax Liability			Acquired Intangible Assets		Goodwill
	(in millions)
eVestment	$	744	$	(10	)	$	(104	)	$	405	$	453

The amounts in the table above represent the preliminary allocation of purchase price as of September 30, 2018 and are subject to revision during the remainder of the measurement period, a period not to exceed 12 months from the acquisition date. Adjustments to the provisional values, which may include tax and other estimates, during the measurement period will be recorded in the reporting period in which the adjustment amounts are determined. Changes to amounts recorded as assets and liabilities may result in a corresponding adjustment to goodwill.

See “Intangible Assets” below for further discussion of intangible assets acquired in the eVestment acquisition.

Acquisition of eVestment

In October 2017, we acquired eVestment for $705 million. The aggregate cash consideration of $744 million, which is net of cash acquired of $22 million, included $39 million of estimated tax benefits associated with the transaction. We acquired net liabilities, at fair value, totaling $10 million and we recorded a net deferred tax liability of $104 million, which is net of the $39 million in estimated tax benefits associated with the transaction. The deferred tax liability recorded of $143 million relates to differences in the U.S. GAAP and tax basis of our investment in eVestment. eVestment is part of our Information Services segment.

Nasdaq used cash on hand and issuances of commercial paper to fund this acquisition.

Acquisition of Sybenetix

In September 2017, we acquired Sybenetix for an immaterial amount. Sybenetix is part of our Market Technology segment.

Intangible Assets

The following table presents the details of acquired intangible assets for eVestment at the date of the acquisition. All acquired intangible assets with finite lives are amortized using the straight-line method.



Intangible Assets
($ in millions)
Customer relationships	$	378
Discount rate used	9.3		%
Estimated average useful life	14 years
Trade name	$	13
Discount rate used	9.2		%
Estimated average useful life	8 years
Technology	$	14
Discount rate used	9.2		%
Estimated average useful life	8 years
Total intangible assets	$	405

Customer Relationships

Customer relationships represent the non-contractual and contractual relationships with customers.

Methodology

For our acquisition of eVestment, customer relationships were valued using the income approach, specifically an excess earnings method. The excess earnings method examines the economic returns contributed by the identified tangible and intangible assets of a company, and then isolates the excess return that is attributable to the intangible asset being valued.

Discount Rates

The discount rates used reflect the amount of risk associated with the hypothetical cash flows for the customer relationships relative to the overall business. In developing a discount rate for the customer relationships, we estimated a weighted-average cost of capital for the overall business and we employed this rate when discounting the cash flows. The resulting discounted cash flows were then tax-effected at the applicable statutory rate.

For our acquisition of eVestment, a discounted tax amortization benefit was added to the fair value of the assets under the assumption that the customer relationships would be amortized for tax purposes over a period of 15 years.

Estimated Useful Life

We estimate the useful life based on the historical behavior of the customers and a parallel analysis of the customers using the excess earnings method.

Trade Name

As part of our acquisition of eVestment, we acquired a trade name. This trade name is recognized in the industry and carries a reputation for quality. As such, the reputation and positive recognition embodied in this trade name is a valuable asset to Nasdaq.

Methodology

The eVestment trade name was valued using the income approach, specifically the relief-from-royalty method, or RFRM. The RFRM is used to estimate the cost savings that accrue to the owner of an intangible asset who would otherwise have to pay royalties or license fees on revenues earned through the use of the asset. The royalty rate is applied to the projected revenue over the expected remaining life of the intangible asset to estimate royalty savings. The net after-tax royalty savings are calculated for each year in the remaining economic life of the trade name and discounted to present value.

Discount Rates

The discount rate used reflects the amount of risk associated with the hypothetical cash flows for the trade name relative to the overall business as discussed above in “Customer Relationships.”

Estimated Useful Life

We have estimated the useful life of the eVestment trade name to be 8 years.

Technology

As part of our acquisition of eVestment, we acquired developed technology.

Methodology

The developed technology was valued using the income approach, specifically the RFRM as discussed above in “Trade Names.”

Discount rate

The discount rate used reflects the amount of risk associated with the hypothetical cash flows for the developed technology relative to the overall business as discussed above in “Customer Relationships.”

Estimated Useful Life

We have estimated the useful life of the eVestment technology to be 8 years.

Pro Forma Results and Acquisition-related Costs

The condensed consolidated financial statements for the three and nine months ended September 30, 2018 and 2017 include the financial results of the above 2017 acquisitions from the date of each acquisition. Pro forma financial results have not been presented since these acquisitions both individually and in the aggregate were not material to our financial results.

Acquisition-related costs for the transactions described above were expensed as incurred and are included in merger and strategic initiatives expense in the Condensed Consolidated Statements of Income.