In the net

10 June 2005

A US fund has raised the suspicion that Reuters was in such a rush to sell Instinet that it failed to get the best price for the unit. But the criticism is at best a halftruth. Delaying the deal to get more for a small part could have jeopardised the whole.

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Electronic brokerage Instinet has rejected a bid by Third Avenue to buy Instinet's brokerage although the fund manager offered more for the unit.

The sale of the brokerage forms part of a larger $1.9bn takeover of Instinet by Nasdaq. Instinet had agreed to sell the brokerage to management backed by private equity firm Silver Lake for $208m. Third Avenue has offered $307m.

Nasdaq's agreement with Silver Lake does not permit Nasdaq to sell that business to a different party, Instinet said in a statement. The merger is believed to have a $65m break fee.

Instinet added that Third Avenue could have offered to buy the unit during the sixmonth sale process of Instinet, but did not participate in the process.

Third Avenue said that by ignoring its offer, Instinet was selling the brokerage at what it believed to be less than book value.

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