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CompaniesNasdaq's bid for London Stock Exchange looks set to fail
Nasdaq's £12.43 a share hostile bid for the London Stock Exchange (LSE) will expire on 10 February. The offer looks likely to fail suggesting shareholders have not been convinced by Nasdaq's arguments.
In a letter to LSE shareholders, Nasdaq claimed the board of the London exchange “completely failed to engage” with the US bourse on the £2.9bn bid. Nasdaq said the only meeting it had had with the LSE was in May 2006, and then as a shareholder rather than potential bidder. The LSE responded by accusing Nasdaq of at no timing attempting to pursue any discussion over the bid, and reiterated its argument that the US exchange’s offer substantially undervalues the London bourse. Chris Gibson-Smith, LSE chief executive, said, “It is time for Nasdaq to shut up or put up”. LSE also cut trading tariffs and increased its share buyback programme by £250m. The LSE predicted a trading increase of at least 180% for 2008. Bob Greifeld, Nasdaq chief executive, said the LSE’s planned cuts to trading tariffs would be “wrung out” of the exchange through customer pressure and competitive action, and would negatively affect the LSE share price. Nasdaq’s problem, said The Guardian’s Nils Pratley (19 January), is that the LSE continues to announce record trading volumes, and the bid has not stood up to scrutiny. The consequences of the LSE now placing a call to Nasdaq, suggested Lombard in the Financial Times (24 January), would be that the news would leak, the market would assume the LSE had capitulated, and shares would drop. No wonder, said Lombard, that shareholders have not been clamouring for the LSE to start negotiating.
The Observer's Ruth Sunderland (21 January) argued that Nasdaq’s bid deserved to fail not only on price, but because it threatened to turn the LSE into a “client state of Wall Street”, damaging the attraction of London for overseas listings.
Michael Harrison in The Independent (19 January) argued that in all the tumult it has nearly been forgotten how unwelcome a takeover of the LSE by Nasdaq would be: the US exchange is attempting to remove a competitor and claw back the international listings lost to New York as a result of the Sarbanes-Oxley legislation. Links
February, 2007 |
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