Nasdaq set to keep stock exchange stake

New York’s Nasdaq today looked set to retain its stake in the London Stock Exchange, despite the crushing defeat for its £2.7bn (€4bn) takeover offer.

As the LSE prepares for its first prolonged spell outside of an offer period since December 2004, it is likely to find Nasdaq remains as a shareholder.

According to one newspaper report today, sources close to Bob Greifeld, chief executive of the tech-laden exchange, have insisted that Nasdaq will not be walking away, adding that Mr Greifeld “felt down but not out” and that it was just the “end of the beginning”.

Nasdaq’s £12.43 a share offer for the LSE lapsed on Saturday when it emerged the US exchange had secured fewer than 1% of acceptances. It had earlier built up a 29% stake in the LSE, but was thwarted by a fierce bid defence from the LSE board, led by chief executive Clare Furse.

She is now likely to turn her attention to striking strategic alliances, in particular a tie-up with the LSE’s counterpart in Japan.

An outline agreement with the Tokyo Stock Exchange is expected to cover areas such as cross-listings, sharing technology and trading systems and joint marketing, a report in the Observer newspaper said today.

The LSE is also planning to return £250m (€374.8m) to shareholders, a process which could begin as a early as next week.

Chairman Chris Gibson-Smith said yesterday that the LSE intended to “build on its exceptionally valuable brand by progressing various competitive, collaborative and strategic opportunities”.

The LSE has been in the bid spotlight since Deutsche Boerse tabled an offer at 530p a share in December 2004. There has also been interest from Paris-based exchange Euronext and the Australian bank Macquarie.

The LSE’s shares have mostly traded above the £13 mark since Nasdaq launched its offer in November, reflecting the interest of hedge-fund investors – mostly American firms – who gambled on a higher bid.

Nasdaq is now prevented from making another offer for 12 months.

The Sunday Times said Mr Greifeld had the backing of his board and shareholders to hold on to the stake. Nasdaq is believed to have only £200 million of debt tied up in the stake.

He added yesterday: “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. However, this disappointment is tempered by the knowledge that we remained true to our value case.”