Nasdaq fails in $7.7bn offer for LSE

By Louise Heavens

Nasdaq Stock Markets suffered a resounding defeat in its £2.7 billion ($7.7 billion) bid for the London Stock Exchange on Saturday, saying it had won just 0.41 per cent of acceptances for its offer for Europe's largest share market.

Added to the 28.75 per cent shareholding it already owns, it fell well short of the level of just over 50 per cent of shareholder acceptances it needed to take control of the LSE.

The London Stock Exchange, which has seen off four takeover attempts in the last two years, said it was now free to fulfil its vision to be the world's capital market without the distraction of defending itself from "ill-considered approaches which fail to understand the value of the business".

"The exchange intends to build on its exceptionally valuable brand by progressing various competitive, collaborative and strategic opportunities, thereby reinforcing its uniquely powerful position in a fast evolving global sector," the LSE's Chairman Chris Gibson-Smith said.

LSE shares closed at 1282p on Friday, a 3 per cent premium to Nasdaq's 1243p a share offer.

Two analysts said the shares were likely to hold relatively firm when dealing opens today since the investors and hedge funds who control interests in the exchange through derivatives have demonstrated by their dismissal of Nasdaq's offer that they believe the LSE's future prospects underpin the share price level.

Both exchanges had engaged in a war of words in recent weeks, with Nasdaq stressing that its offer price also reflected the impact of increased competition from dissatisfied investment banks, which agreed late last year to create a rival trading platform.

That plan, called Project Turquoise, is being developed by a group including Citigroup, Credit Suisse Group and Merrill Lynch. The LSE has said the boom in electronic trading, and its ability to attract companies from around the globe to list on its exchange in an environment of benign regulation, means it is worth considerably more than 1243p.

"I increasingly believe that Project Turquoise will happen. A year ago I wouldn't have believed that 50 per cent of the LSE's liquidity would club together to take that business away from the exchange," said Mamoun Tazi, an analyst at Man Financial.

The pace of mergers among the world's stock exchanges is picking up as they come under pressure from customers to offer global services and cut fees. Competition is also becoming more intense, with a group of investment banks planning to create a pan-European equity trading platform this year.

The LSE has long been a takeover target, in part because of its relatively small market capitalisation compared with rivals. Its shares have more than trebled over the past two years as it has received and rejected a string of offers.

Nasdaq said it stood by its view that 1243p was a fair price, given increased competition in the industry.

- REUTERS

© Copyright 2014, APN New Zealand Limited

Assembled by: (static) on red akl_n2 at 20 Sep 2014 13:02:01 Processing Time: 510ms