Nasdaq has reached an agreement to buy the anti-financial crime software firm Verafin for $2.75 billion in cash, the companies announced.
The exchange group said it aimed to provide Verafin’s technology to the 250 banks, exchanges, broker-dealers, buy-side organizations, and regulatory authorities that use its trade surveillance systems.
“The problem of detecting money laundering and fraud hasn’t been solved very well yet,” Valerie Bannert-Thurner, senior vice president and head of sell-side and buy-side solutions, market technology at Nasdaq, said in an interview. “With our acquisition we are doubling down on our belief this as an area that is being disrupted and where we can have a big impact.”
According to the United Nations, up to $2 trillion is laundered globally each year, representing up to 5% of global GDP.
Nasdaq intends to finance the transaction with a combination of $2.5 billion of debt and cash on hand.
The deal is expected to deliver earnings-per-share accretion beginning in 2022 and to meet the company’s capital return objectives. Verafin is expected to produce more than $140 million in revenue next year.
The deal is the largest for Nasdaq since it acquired Nordic exchange OMX in 2008 for $3.8 billion. As part of the acquisition, it committed to keeping Verafin’s executive leadership in place and keep the company’s headquarters in St. John’s, Newfoundland, and Labrador. It also agreed to work with Memorial University to enhance its co-op programs and to fund and supervise six fellowships annually for masters and doctoral students.
“We believe that Verafin will not only complement and grow our existing presence in Canada, but also represents a potential catalyst for further investment opportunities in the province and the country,” Nasdaq chief executive officer Adena Friedman said.
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