NASDAQ Bid for LSE Fails

NASDAQ’s bid to purchase the London Stock Exchange formally closed at 1pm GMT on Saturday. The price set was 1,243p per share, and the response was underwhelming. Only 0.4% of LSE shareholders backed the plan. The LSE is now moving forward with talks with the Tokyo Stock Exchange, while NASDAQ pledges that it’s going to keep its 29% stake in the LSE.

There was some drama in trading on Friday as the stock price for the LSE dropped some. Since November, when the NASDAQ’s bid came out, the shares have traded hands for more than £13 a share. On the final day of trading, the price plunged to £12.62, but then, it recovered to close at £12.82. At 39p shy of the market price, the NASDAQ bid was doomed. Under English law, the NASDAQ cannot make another bid for the LSE for the next 12 months.

So, the LSE is now looking for another global arrangement, one in which it has more control. “There are talks between Tokyo and London,” an LSE spokesman told the BBC. “It’s about co-operation, how two exchanges might work together to their mutual advantage. We are a very international business and we have good working relationships with a number of exchanges.”

Interestingly, the New York Stock Exchange and the Tokyo Stock Exchange announced last month that they were cooperating to promote mutual stock listings as well as develop new financial products. Tokyo Stock Exchange President Taizo Nishimura will visit Britain next month, and Japan’s Kyodo News agency says an alliance will be sealed then.

As for NASDAQ, it joins the list of failed suitors for the LSE which includes Euronext, Germany’'s Deutsche Boerse and Australia’s Macquarie Bank. However, with a 29% stake in the LSE, it does have quite a bit to say over what happens next. If the share price drops, there may be a chance next year to launch a renewed hostile attempt. If the share price rises, it makes money. Not a complete disaster.

© Copyright 2007 by The Kensington Review, Jeff Myhre, PhD, Editor. No part of this publication may be reproduced without written consent. Produced using Fedora Linux.

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