The London Stock Exchange hinted today that it would refuse any takeover offer pitched at £3bn (€4.3bn) after US rival Nasdaq snapped up 15% of its shares.
The LSE said its current share price of 1198.5p did not “fully reflect the shift in its growth prospects, its unique franchise or the strategic options available to it”.
It also revealed that it was in discussions with rival exchanges to create value for its shareholders, although it did not elaborate on how this would be achieved.
Shares in the LSE shot up 15% today after trading began for the first time since Nasdaq – home to internet search engine Google – made its investment.
The surprise swoop raised expectations that LSE could finally succumb to a takeover after almost 18 months of approaches from a number of parties, including a failed attempt by Nasdaq recently.
The price of 1175p paid by Nasdaq for 38.1 million shares was well ahead of the 950p it offered in its £2.43bn (€3.5bn) takeover move last month.
The £447.5m (€647m) share buying spree included the acquisition of the entire 13.8% holding of Threadneedle Investments.
Threadneedle’s head of equities Michael Taylor said: “We continue to believe that the LSE is the world’s most successful cash equity trading platform operating in the world’s most successful financial centre and are pleased to see this value recognised by the market.”
As Nasdaq withdrew its previous offer, it must wait six months until making another bid, unless the LSE backs an offer or another buyer emerges.
The New York-based exchange has declined to elaborate on its position, apart from calling the stake an “important strategic purchase”.
As well as putting it in a strong position to bid, the 15% shareholding will make life difficult for other parties interested in the LSE.
Paris-based exchange Euronext, Deutsche Boerse and Australian investment bank Macquarie have circled the LSE in the past, while the New York Stock Exchange is also thought to be interested.
In its response to the investment by Nasdaq, the LSE said it had “extremely strong growth prospects as a standalone business”. Its SETS electronic trading system completed 38% more trades between January and March than it did at the same stage of last year.
“Furthermore, the board is exploring the options available to it to create additional value for shareholders and customers, including discussions with other major exchanges,” the LSE said.
Plans to return £510m (€738m) of capital would remain in place, it added.