Plea to shareholders after LSE bid rejected
The Nasdaq bid to takeover the London Stock Exchange (LSE) turned hostile tonight after its £2.7bn (€4bn) bid was rejected.
The New York bourse said it will go straight to LSE shareholders with its "final" 1243p-a-share offer after it was turned down by the LSE board.
Nasdaq president and chief executive Robert Greifeld said he was "disappointed" by the rejection and the refusal of the LSE board to even meet and discuss the proposal.
Nasdaq said it will "proceed with its final offer to the LSE shareholders" regardless of the board's rebuttal.
It came after the LSE said the latest Nasdaq offer "substantially undervalues the company". An earlier offer of £2.4bn (€3.5bn) was turned down in March.
LSE chief executive Clara Furse today said: "We believe Nasdaq's final offer fails to recognise the outstanding growth record and prospects of our group on a standalone basis let alone the Exchange's unique global position."
The LSE pointed to record first half profits and the success of its new electronic order book Sets.
Chairman Chris Gibson-Smith added: "Given the board's unanimous view of the final offer from Nasdaq, I have rejected Nasdaq's request for a meeting."
Nasdaq lodged its bid this morning and minutes later increased its stake in the LSE from 25% to 28.75% with the acquisition of more than seven million shares at 1243p each, or £87.8m (€130m).
Gavin Oldham, chief executive of investment advice firm The Share Centre, said Nasdaq may have to improve its offer to win overall control.
"They have taken their stake up to nearly 29% so they have got 21% to go," he said. "I think they may have to pay a bit more to shake out some of these people."
Shares in the LSE jumped 6% to 1291p today as investors gambled on a better offer being made.
The stock has more than tripled in value in the past two years amid takeover interest from Nasdaq as well as from rival exchanges Deutsche Boerse and Euronext, Australian investment bank Macquarie and money broker Icap.
A combination with Nasdaq would create the world's largest equity market by listings made up of more than 6,400 quoted companies with a total market capitalisation of £6.3 trillion (€9.3 trillion).
Financial markets in the US and Europe are under pressure to consolidate to create cross-border trading opportunities.
The New York Stock Exchange is favourite to land Paris-based Euronext and a tie-up between Nasdaq and the LSE is seen by analysts as an obvious step.
The pressure to secure a deal increased last week when seven investment banks, including Goldman Sachs and Citigroup, unveiled plans for a rival European platform of their own to challenge the likes of the LSE.
It was feared that the move - codenamed Project Turquoise - could hit revenues at LSE and shares fell 7% last week.
Mr Greifeld said the 1243p-a-share offer was "full, final and fair" and added that he had hoped for the approval of the LSE board.
He said: "With the developments in the market and Project Turquoise it became clear that while the LSE has done well as a stand-alone entity for some time, in future years it is important for consolidation to take place."
Mr Greifeld said a combined Nasdaq and LSE would be "well positioned to lead further consolidation and compete effectively for the benefit of all market users".
