Companies

Gulf rivals acquire almost half of LSE

Nearly 50% of the London Stock Exchange (LSE) has been purchased by rival sovereign backed firms from the Middle East.

Borse Dubai and US exchange Nasdaq have reached an agreement that will allow Nasdaq to win control of Scandinavian exchange OMX. In return, Borse Dubai will acquire the majority of Nasdaq’s 31% stake in the LSE and a 19.99% stake in Nasdaq itself. Borse Dubai will only, however, have 5% voting rights in Nasdaq.

Borse Dubai will pay £14.14 per share for a 28% stake in the LSE, and Nasdaq will acquire all OMX shares to be purchased by Borse Dubai in its offer for OMX. Nasdaq and Borse Dubai have been competing suitors for OMX.

Following this, the Qatar Investment Authority (QIA) – previously seen as a possible buyer for Nasdaq’s LSE stake – itself purchased a 20% stake in the London bourse. The QIA also bought an almost 10% stake in OMX.

The Independent’s Jeremy Warner (21 September) suggested the only way of making sense of this pass-the-parcel of share stakes between the four exchanges is the fierce regional rivalry between Dubai and Qatar for the status of the Middle East’s pre-eminent financial centre. The two may be small, said Warner, but what they lack in size they make up for in ambition and access to funds, and LSE shareholders are finding themselves the beneficiaries of this tug-of-war.

October 2007