NDB is an S&P 600 Small Cap Index company which engages in three areas of business through three wholly-owned subsidiaries: NDB Capital Markets L.P. ("NDB Capital Markets"), established in 1968, a market maker in over 4,000 NASDAQ and other OTC securities; NDB.com, a leading online broker; and Millenium Clearing Company, L.L.C., a securities clearing operation scheduled to begin operation in 2001. NDB has one of the industry's preeminent management teams, led by Arthur Kontos, President and CEO.
For Deutsche Bank, the transaction marks an important step toward enhancing its global equities capabilities. Upon the successful completion of the transaction, Deutsche Bank will make markets in more than 4,000 NASDAQ and OTC securities and will be by volume one of the five largest NASDAQ market makers. Deutsche Bank will also benefit from NDB's trading technology platform, generating significant synergies through the internalization of order flow.
The companies expect to realize significant cost synergies by combining their U.S. clearing and settlement operations and achieving far greater scale. Revenue synergies are expected to be generated by internalizing order flow and from greater retail market penetration resulting from the addition of NDB's online brokerage operation to Deutsche Bank's U.S. and European retail platforms. In terms of global distribution, Deutsche Bank's capital raising activities and leadership in Europe's fast-growing capital markets can now be placed at the service of a U.S. retail customer base.
The transaction also provides the opportunity to combine two complementary online brokerage operations. NDB.com, recently ranked #1 in Barron's Best of Online Brokers survey in 2000, has 268,900 customer accounts and US$ 11.2 billion in customer assets. Deutsche Bank's online brokerage, Brokerage 24, is already a leading brokerage in Europe. Combined, the two companies will offer customers unique access to the world's global equity markets. NDB's online brokerage strength complements Deutsche Bank's already successful Deutsche Banc Alex. Brown Private Client Group by offering an additional retail distribution channel for financial products.
Based on current earnings estimates, the transaction is expected to be slightly accretive to 2001 earnings, including modest synergies.
The merger agreement calls for Deutsche Bank to commence a tender offer to purchase all outstanding NDB shares promptly. Any shares not purchased in the offer would be converted into US$ 49.00 per share in cash in a merger of NDB with a subsidiary of Deutsche Bank. The transaction, which is expected to close before year-end, is subject to a number of conditions, including the approval of Deutsche Bank's Supervisory Board, various regulatory approvals and other customary closing conditions. Certain shareholders of NDB (other than Deutsche Bank), holding in the aggregate approximately 29 % of the outstanding shares, have agreed to tender their shares pursuant to Deutsche Bank's offer.