NYSE 'to bid for London exchange'

The New York Stock Exchange was today understood to be considering launching a bid for its London counterpart.

John Thain, the chief executive of the New York Stock Exchange (NYSE) was this weekend reported to be consulting advisers about whether to table a counter bid for the London Stock Exchange, according to Sunday newspapers.

But the group is understood to be at least six weeks away from making an offer, having just floated on its own market.

The news comes just two days after the London Stock Exchange rejected a £2.43 billion takeover approach from US exchange Nasdaq.

The group turned down the 950p-a-share offer from the tech-heavy Nasdaq claiming it “substantially” undervalued the company, and offered investors only an 8% premium on the current value of its shares.

Meanwhile, it was reported that the Nasdaq was considering approaching shareholders directly, and may even increase its offer to £10 a share.

There were also claims that the LSE’s institutional shareholders were considering backing the Nasdaq bid and are due to have meetings with the US exchange.

It was also reported that pan-European exchange operator Euronext was thinking of offering a fresh challenge for the group, although other reports claimed the exchange would now bow to shareholder pressure and walk away from the contest.

Either way, Euronext is widely expected to get clearance from the Competition Commission this week to make a bid for the LSE, subject to certain conditions.

The LSE is thought to favour an approach from a major exchange group would could lead to significant synergies.

The Nasdaq offer and rumours of a potential bid from the NYSE and Euronext come just weeks after the LSE saw off a £2.16 billion bid by Australian bank Macquarie.

The takeover race for the London exchange was launched by German exchange Deutsche Boerse with its £1.35 billion approach in 2004, although it later walked away in the face of shareholder unrest.

The LSE recently announced plans to return £510 million to shareholders and increase this year’s dividend payment by 7%.

Recent figures showed that there had been record levels of trading on its SETS system in the first two months of this year.

February accounted for nine of the 20 busiest days ever on SETS with the average daily value traded up 43% to £5.8 billion and the average number of trades per day rising by 35%.