NASDAQ offers $4.1 billion for London Stock Exchange
13 Mar 2006
NASDAQ Stock Market Inc, which operates the second-largest stock market in the world after NYSE, has made an unsolicited bid for London Stock Exchange (LSE). The all-cash bid revealed on Friday is worth $4.1 billion and led to a huge rally in the NASDAQ stock.
However, the LSE has rejected the bid stating that it is too low. The bid was made at a premium of around 8 per cent to Friday's closing price of LSE stock. NASDAQ had made an attempt to acquire LSE in 2002 which failed because of regulatory issues in the US and Europe.
After the rejection from LSE, NASDAQ may sweeten the bid by offering part cash and part stock to the shareholders of LSE. Such a deal would help LSE shareholders to benefit from the gains of consolidation.
If the deal goes through, the combined exchange would have around 6,000 companies listed on it with a market capitalisation of more than $7 trillion.
The consolidation moves between major stocks exchanges seems to be gathering pace. LSE is a major target for such moves because of its reputation and the large number of companies listed. Over the last couple of years, German stock exchange Deutsche Boerse and Macquarie Bank of Australia had made unsolicited bids for LSE. Both pervious bidders had quoted a much lower price than the latest one from NASDAQ.
It is expected that NYSE, the world's largest stock exchange, would also bid for LSE. US based exchanges are struggling to get more and more foreign companies to list on them because of some tough regulations like Sarbanes-Oxley Act and higher costs. Hence they are increasingly getting interested in global alliances and acquiring other exchanges.
NYSE got itself listed for trading last week, a move widely seen as an attempt to facilitate future acquisitions through share-swaps.
There
has been some consolidation between US exchanges as well.
NYSE merged with online exchange Archipelago last year
while NASDAQ had earlier acquired Instinet.
