February 12, 2007
London Stock Exchange Fends Off Nasdaq Bid
Over the past few years, we have seen a fair amount of consolidation among the major financial exchanges. We saw the New York Stock Exchange purchasing Archipelago and Euronext and the Chicago Board of Trade agree to a merger with the Chicago Mercantile Exchange. With two of its largest competitors making these large strides to become larger and more diverse, Nasdaq, an exchange dealing primarily with technology companies, has been looking for a suitor to increase its size.
Nasdaq believes I has found this suitor in the London Stock Exchange. Over the past couple years, Nasdaq has been building a large equity stake in the LSE and has made a couple bids for the exchange. However, the other LSE share holders have been reluctant to accept any deal. This weekend, the LSE rejected yet another bit by Nasdaq, their third attempt, calling into question what the Nasdaq will do with their stake in the exchange.
UK rules prohibit Nasdaq from acquiring any more than their current stake of about 30%, which removes the option of them simply purchasing a 51% controlling stake. Many believe that the LSE may be in trouble for not taking this bid due to concerns regarding its fee structure and trading platform that have been complaints of brokerages that use the exchange and increasing competition from NYSE-Euronext. There are also questions about what Nasdaq will do with their 30% position in the LSE, should they choose to unload it, LSE shares would surely suffer losses. Where this story ends is anyone’s guess.
Posted by jkill at February 12, 2007 03:10 PM