Nasdaq Makes $5.1 Billion Bid for London Stock Exchange

FOR IMMEDIATE RELEASE
(Free-Press-Release.com) November 20, 2006 -- The Nasdaq Stock Market Inc. on Monday launched a $5.1 billion bid to take over the London Stock Exchange, seeking to create a trans-atlantic giant to compete with the New York Stock Exchange's acquisition of the four Euronext exchanges.

Nasdaq said the combination would also give it the leverage to compete against a new European exchange that seven major investment banks said last week they intend to create.

New York-based Nasdaq (NDAQ) offered 1243 pence ($23.56) a share, the minimum bid it could make under City of London takeover rules, compared to Friday's closing price of 1218 pence.

"This will be financed with our own cash, as well as by debt and with preferred stock," Chief Financial Officer David Warren said in a conference call with reporters.

He declined to estimate savings from combining the two exchanges or to say how much how much the financing would cost, but promised investors would have more detail in the full offer document.

LSE shares traded at 1285 pence ($24.36) in Monday morning trading. The exchange had no immediate comment on the Nasdaq approach.

Earlier this year, Nasdaq made an offer of 950 pence per share for the LSE, but abruptly withdrew in March.

"A Nasdaq/LSE combination will create a cash equities market place with a total market capitalization in excess of 6.3 trillion pounds ($11.8 trillion) and over 6,400 listed companies," Nasdaq said in its announcement.

"The enlarged group will benefit from the combined strengths of the two organizations, and will present listed companies, traders, and investors with a broad range of services unmatched by any other marketplace currently operating in the world at highly competitive prices. The combined entity will be well positioned to lead further consolidation and compete effectively with any transatlantic or European combination."

Nasdaq said it was seeking a meeting with LSE Chairman Chris Gibson-Smith in a bid to get board approval.

Katrina Preston, an analyst at Bridgewell Securities, said the LSE was likely to reject the offer, arguing that it "does not represent sufficient value compared with trading valuations of rival exchanges."

But Fox-Pitt Kelton analyst Andrew Mitchell said the bid was shrewdly timed following last week's slump in the share price below 1300 pence, and that it would be "difficult for London to defend itself."

The LSE's share price dropped after the investment banks announced their plan for a rival exchange.

Australia's Macquarie Bank Ltd., Germany's Deutsche Bourse AG and Sweden's OM Gruppen have all failed in previous overtures to take over Europe's oldest exchange.

Mitchell said Nasdaq faced no obvious rivals this time around.

"Deutsche Boerse attempted before at a much lower level and you can't rule them out entirely, but they are an unlikely candidate," he said.

The combined sales of Nasdaq and LSE would be about $1.4 billion, based on their last full-year results presentations, compared with about $2.3 billion for NYSE-Euronext.

The New York Stock Exchange owner, NYSE Group Inc. (NYX), agreed in June to pay $9.96 billion for Euronext, which operates the Paris, Amsterdam, Brussels and Lisbon exchanges. The bid subsequently rose to $13 billion.

Frankfurt-based Deutsche Boerse, which dropped its $10.23 billion bid to acquire Euronext NV last week, has said it wants to increase its presence in Russia along with Central and Eastern Europe.

Nasdaq announced that its takeover subsidiary, Nightingale Acquisition, had purchased 7,065,984 ordinary shares in the LSE at 1243 pence per share, or $166.4 million, representing 28.75 percent of the shares.

Nasdaq Chairman and Chief Executive Robert Greifeld said he wasn't concerned about last week's news that seven major investment banks � Citigroup Inc. (C), Credit Suisse Group, Deutsche Bank AG (DB), Goldman Sachs Group Inc. (GS), Merrill Lynch & Co. (MER), Morgan Stanley (MS) and UBS AG � plan to launch their own European equities exchange next year.

"It's important to note that Nasdaq was not born through a historical monopoly. It has had to compete. We clearly have our competitive instincts engaged," Greifeld told reporters.

The Nasdaq Market Inc. is the holding company of The Nasdaq Stock Market LLC, which commenced operations as a U.S. national securities exchange for Nasdaq-listed securities on Aug. 1.

Source: http://www.foxnews.com/

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