Reuters sells Instinet to Nasdaq

The deal was widely expected by stock market pundits

News and information provider Reuters Group says it is selling off its 62% stake in electronic brokerage Instinet for around £523m ($1bn).

The trading network is being bought by the Nasdaq stock market and a consortium of US investors.

Reuters said it would return an amount equivalent to the net proceeds of the Instinet sale to its shareholders.

The group has been selling non-core assets to focus on its main business of providing news and financial data.

Shares in Reuters closed 4 pence higher on Friday at 417p.

Consolidation

Reuters announced back in November that it was seeking a buyer for Instinet and has been in talks with several interested parties.

Reuters shareholders will see a significant return of cash Tom Glocer, chief executive See Reuters share price

The firm had already made it clear it did not view its electronic trading arm as a long-term core asset.

"The electronic markets for trading equities will benefit from consolidation," said Reuters chief executive Tom Glocer.

"Reuters shareholders will see a significant return of cash and Instinet will become core to the operations of the new owners."

Under the deal, Instinet's electronic trading network will go to Nasdaq, while its institutional brokerage will go to private equity group Silver Lake Partners. The Bank of New York will buy its Lynch, Jones and Ryan unit.

The move follows this week's announcement that the New York Stock Exchange (NYSE) was buying electronic trading company Archipelago Holdings.

Analysts speculate that the NYSE's acquisition could stoke the already fierce competition between it and Nasdaq.

The Instinet deal is expected to be completed by the end of the year.