Companies
London Stock Exchange shareholders consider Nasdaq offer
London Stock Exchange (LSE) shareholders have until 11 January to respond to
Nasdaq's
offer for the
company, which values the LSE at around £2.7bn or £12.43 a share.
The LSE reaffirmed its rejection of Nasdaq's offer
arguing that it substantially undervalued the company and failed it reflect the
unique strategic position and the powerful earnings and operational momentum of
the business. The LSE's board called on shareholders to also reject the offer.
Nasdaq has already acquired a 28.75% stake in the LSE
and the offer will be declared unconditional if over 50% of the shares are voted
in favour which means only a minimum of 21% of shares not owned by Nasdaq need
to be voted in its vavour.
The Guardian’s Nils Pratley (13
December), suggested that with so little extra support required it seemed likely Clara Furse, LSE chief
executive, would be forced to the negotiating table. However, with the LSE's
share price not dropping Pratley later suggested (20 December) that Nasdaq
was under pressure to improve its terms.
Jeremy Warner, writing in
The Independent (20 December)
suggested that with hedge funds now dominant among the LSE investors the main
aim would be to push for a higher offer rather than to support a defence of the
LSE's independence.
Damian Reece in the
Daily Telegraph (20 December) commented that performance figures from
Thomson Financial
showed that LSE had been outperforming its rivals in 2006, including Nasdaq, and
showed why the US exchange was so desperate to buy it and why the LSE should be
so desperate to remain independent.
While concerns about Nasdaq’s bid for the LSE have to
date focused on US regulatory overspill, John Plender in the
Financial Times (11 December) suggested its
business model also presents grounds for unease. Nasdaq’s model, said Plender,
entails extremely high leverage in a bid that comes prior to the structural
changes in the European securities industry that will be brought about by MiFID
– part of the EU’s plans to create a single market and regulatory regime.
MiFID seems certain to increase competition for
exchanges – the most immediate example being plans by investment banks to set up
their own trading platform – and it is easy to envisage a situation where the
LSE might be badly hit, argued Plender. Plender said that while the FSA’s
instincts are currently liberal, and regulator may still be concerned about
potentially unstable ownership for what is a vital part of London’s financial
infrastructure.
Links
London Stock Exchange
Nasdaq
The Guardian
Financial Times
January, 2007 |
