Nasdaq loses year-long battle for LSE

LONDON: The US stock exchange operator Nasdaq failed Saturday to win control of the London Stock Exchange after LSE shareholders decided overwhelmingly against backing a hostile takeover worth 2.9 billion pounds ($5.5 billion).   

"We are naturally disappointed at this outcome as we remain of the view that the Final Offers represented a full and fair price for LSE shareholders," the Nasdaq's chief executive Bob Greifeld said.   

Welcoming the rejection, the LSE board said Europe's biggest stock exchange "looks forward to fulfilling its vision to be the world's capital market, without the distraction of ill-considered approaches which fail to understand the value of the business".   

A deadline for shareholders of the London exchange to accept the offer expired at 1:00 pm (1300 GMT) Saturday, following the Nasdaq's battle to acquire the LSE lasting almost one year.   

LSE chief executive Clara Furse had repeatedly described the offer as too low and had refused to meet Greifeld to discuss the bid.   

The US technology-weighted exchange, which had built up a 28.75 per cent stake in the LSE, offered 1,243 pence per share for the remaining 71.25 per cent.    

The Nasdaq said Saturday that it had received support from shareholders controlling just 0.41 per cent of the LSE, which lists heavyweights including oil group BP, mobile phone company Vodafone and British Airways. That lifted the Nasdaq's stake to 29.16 percent, but way below the 50 percent it needs to control the London exchange.   

The Nasdaq's bid meanwhile came as the rival New York Stock Exchange is scheduled to merge with the pan-European market operator Euronext as big exchanges vie to provide wider offerings and lower fees to investors.   

Greifeld said that the disappointment of losing out to the LSE was "tempered by the knowledge that we remained true to our value case".    

He added: "We have a highly disciplined approach to acquisitions and will only consummate transactions to the extent that they deliver clear and visible benefits for Nasdaq shareholders, and enable us to allocate benefits to market participants."   

The Nasdaq had insisted ahead of Saturday's deadline that it would not raise its offer, which was below the LSE's current share price of 1,282 pence.    

What the Nasdaq does now remains uncertain. It may seek to sell its stake at a profit, or hold on to it until it is allowed to table a renewed bid in a year.    

The Nasdaq has meanwhile warned that it could join forces with the consortium of seven leading investment banks which plan to set up their own platform for trading European equities, potentially depriving the LSE of a large proportion of its business.    

The LSE has fended off four takeover attempts in the past two years, including an initial 2.4-billion-pound offer in March 2006 from Nasdaq, which is dominated by US technology listings including online search engine Google.   

After having its initial bid rejected, the Nasdaq had to wait six months before making another tilt owing to British takeover rules.    

In November its improved bid was rejected by the LSE board, resulting in Nasdaq going hostile and approaching LSE shareholders directly. In a bid to fend off the Nasdaq, the LSE announced in January that it would return an additional 250 million pounds to investors via its share buy-back programme.   

The extended share buy-back offer brings to 974 million pounds the amount the LSE will have returned to its shareholders since August 2004.   

Meanwhile since the Nasdaq made its first advances almost a year ago, the LSE share price has rocketed to a record high 1,350 pence, compared with 860 pence at the start of March, 2006.    

The Nasdaq had warned that the share price would tumble in the event of a bid rejection. Trading in LSE shares resumes on Monday. Excluding debt, the Nasdaq's bid was worth 2.7 billion pounds.