LSE rejects Nasdaq bid

21-11-2006

LSE rejects Nasdaq bid
The London Stock Exchange (LSE) has rejected a £2.7 billion takeover bid from US market Nasdaq, claiming that the offer "substantially undervalues" the company.

In a statement the LSE stressed that the cash offer, which valued each share at £12.43, failed to reflect its "unique strategic position and the powerful earnings and operational momentum of the business".

Nasdaq subsequently expressed disappointment at the swift rejection of its offer, which was made yesterday.

The bid followed the rejection of the US market's previous £2.4 billion offer for the LSE in March and was the latest in a series of takeover bids which rival exchanges have made for the London bourse over the past year and a half.

Pan-European bourse Euronext, Deutsche Boerse and the New York Stock Exchange have all tried and failed to seize control of the LSE, as the world's stock exchanges increasingly look to consolidate their operations in order to cut costs.

Rejecting Nasdaq's latest offer on the grounds that it undervalued the exchange, the LSE referred to interim half-year results published earlier this month showing that the company had continued to show "strong growth", drawing attention to a 60 per cent rise in operating profit posted for the six months ending September 30th 2006.

"We believe Nasdaq's final offer fails to recognise the outstanding growth record and prospects of our group on a standalone basis let alone the exchange's unique global position," said LSE chief executive Clara Furse.

Nasdaq, which also upped its stake in the LSE to 28.75 per cent yesterday, said that it believed its takeover offer "fully reflected" the potential shown by the exchange in its half-year interim results and expressed disappointment that the company's board were unprepared to meet with its representatives.

"We are disappointed by the quick rejection of our proposal and the LSE board's refusal to meet with Nasdaq," said Nasdaq president Robert Greifeld.

Making yesterday's bid, the US stock exchange had stressed that its latest offer took into account the £284.7 million of net debt held by the LSE on September 30th this year.

Yesterday, the government indicated that it had no objection in principle to the LSE being taken over by a foreign exchange, but expressed concern that any change in ownership should not affect the existing regulatory regime to which the bourse was subject to.

"Our interest in the ownership of the LSE is that it should not affect the existing risk-based regulatory regime under which the exchange and its members and issuers operate," Treasury minister Ed Balls told representatives of the Institute of Chartered Accountants of England and Wales.

London mayor Ken Livingstone was less optimistic about the prospect of a Nasdaq takeover of the LSE, issuing a statement indicating that such a deal would be "anti-competitive and therefore against the interests of London".


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