Nasdaq to Acquire Index Provider DWA

Nasdaq has agreed to acquire Dorsey, Wright & Associates (DWA), a provider of data analytics, passive indexing and smart beta strategies, with the deal expected to close in the first quarter this year.

Subject to approval, Nasdaq will pay $225 million for DWA, funded through a mix of debt and available cash. Nasdaq also plans to integrate DWA’s team into the combined company.

DWA will add to Nasdaq’s index portfolio, particularly in that smart beta index space. By adding DWA’s 17 exchange-traded funds (ETFs) to Nasdaq’s 69 licensed smart-beta ETFs, Nasdaq Global Indexes will have nearly $45 billion in assets benchmarked to its family of smart beta indexes and more than $105 billion benchmarked to all Nasdaq Indexes.

“Our index business has been a strong growth area for Nasdaq over the last decade, and the acquisition of Dorsey Wright & Associates will further cement our position as a major player and industry innovator,” says Adena Friedman, president of Nasdaq. “We are always looking for opportunities to expand Nasdaq’s index offering with quality products that deepen our relationships with the investing community. DWA provides a natural complement to our business and growth strategy.”

“Smart Beta represents one of the fastest growing sectors within the ETF market,” says Tom Dorsey, president, DWA. “This deal will allow us to grow significantly, while continuing to create products and strategies that meet the needs of our clients.”

Aside from the index business, Nasdaq says it sees potential to enhance DWA’s web-based advisor tools used to deliver DWA’s methodology into tactical asset allocation models, which Nasdaq thinks will be important for financial advisors as the market moves more toward model-based investing.