Nasdaq expects LSE sale to boost OMX bid

Nasdaq currently owns a 31% stake in the London exchange. (Getty Images)

Nasdaq expects the sale of its London Stock Exchange (LSE) stake to boost its stock price and enrich its bid for OMX, target of a higher offer from Borse Dubai, the US company's head said on Tuesday.

The cash-and-shares bid from Nasdaq Stock Market is currently worth about 204 Swedish crowns a share, or $3.7 billion, versus the 230 crowns in cash, or $4 billion, offered by state-owned Borse Dubai.

Robert Greifeld said Nasdaq's plan to sell its 31% stake in London Stock Exchange Group, announced on Monday, and to use proceeds to pay down debt and buy back shares that would effectively raise the value of its OMX offer.

"We do expect that to have a positive impact on our stock in the weeks and months to come," Greifeld, in Stockholm to talk to OMX shareholders about the merits of the Nasdaq offer, told Reuters in a telephone interview.

"And as a result of our stock climbing, it obviously automatically increases, by default, our bid for OMX."

He said given a "reasonable" price-to-earnings multiple, Nasdaq stock could rise by some $10 as a result of the LSE deal.

"Say our stock goes up to... $40, then the implied bid for OMX becomes 230 or 232 [crowns per share] as a result of that because of the share component," Greifeld added.

He said it was impossible to say when Nasdaq would sell its LSE stake, but he expected it to be in the next month or so.

Borse Dubai CEO Per Larsson, also in the Swedish capital to woo investors, declined to comment on Greifeld's argument.

"The value of the bid has to be decided by the owners in OMX," the former OMX CEO told Reuters.

Investor AB, the investment arm of Sweden's powerful Wallenberg family with a 10.7% OMX stake, said it was weighing both bids. Spokesman Fredrik Lindgren repeated that Investor saw "large synergies and developing possibilities" in a Nasdaq union.

Although neither Larsson nor Greifeld was willing to say they would consider a formal bid increase, OMX shares closed at 239.50 crowns, implying the market expects a bidding war. Nasdaq shares were down 1.9% at $30.92 by 1815 GMT.

Consolidation trend

Stock exchanges around the globe have been looking at tie-ups to achieve global reach and economies of scale as members demand more sophisticated products and cheaper trading.

New York Stock Exchange owner NYSE Group became NYSE Euronext after snapping up pan-European exchange Euronext in April, while the LSE is buying Italian rival Borsa Italiana after fending off several advances, including Nasdaq's.

OMX owns and runs exchanges in Stockholm, Helsinki, Copenhagen, Reykjavik and the Baltic states. Adding to the Nordic company's appeal is the fact that it develops and sells exchange software, supplying more than 60 exchanges worldwide.

Borse Dubai already uses OMX technology and wants to leverage this - along with its target's experience building exchange networks - to grow in the Middle East, North Africa and central and southern Asia, as well as Europe.

"Our objective is to become one of the three largest exchange groups in the world," Larsson said, adding he saw many conflicts in an OMX-Nasdaq merger.

"There are conflicting technologies, there are different legal and regulatory environments, there are two strong brands to compete and there are two exchange networks. I don't see the complementarity in that," he said.

Some Nordic market players have expressed concern that a Nasdaq union would lead to tougher US regulations being imposed on companies listed in the region, making it a less appealing place to list.

At the time the Nasdaq merger plan was revealed, OMX and Nasdaq said regulatory oversight would not be affected and that they saw significant synergies from merging technology.

Both Larsson and Greifeld said they had received a positive response from OMX stakeholders.

Greifeld said OMX shareholders were "truly gaining an understanding of the industrial and commercial logic of this transaction [with Nasdaq]".

Larsson declined to comment on whether Borse Dubai would consider a three-way deal with Nasdaq and OMX or whether it was interested in acquiring the London Stock Exchange at some point.

Print | Email | Discuss this article |

READERS' COMMENTS

Click here to post a comment

Add your Comment All posts are sent to the administrator for review and are published only after approval. ArabianBusiness.com reserves the right to remove any comment at any time for any reason. Please keep your responses appropriate and on topic.
Name *
Remember me on this computer
Email *	(Your email address will not be published)
City
Country
Subject *
Comment *
Notify me of further comments
Security Code *
Please click post only once - your comment will not be published immediately.

MORE FROM ARABIANBUSINESS.COM