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Thu 10 Feb 2011 12:11 PM

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Dubai wins on planned LSE, Toronto $3.2bn merger

Borse Dubai would own 11.3% stake in world’s fourth largest stock exchange, sees stake gain $2.5m

Dubai wins on planned LSE, Toronto $3.2bn merger
The proposed merger between LSE and TMX would create the worlds fourth-largest exchange with $4.1 trillion of stock changing hands a year

A proposed $3.2bn merger between the London Stock Exchange and Canada’s TMX spells good news for Borse Dubai, which saw its 20 percent stake in LSE gain more than $25m Wednesday on news of the deal.

Markets welcomed the merger that would create the world's fourth-largest exchange and a top centre for trading mining and energy shares, with $4.1 trillion of stock changing hands a year.

Borse Dubai, the largest single shareholder in LSE, would hold an 11.3 percent stake in the proposed exchange group, making it the largest single shareholder.

Xavier Rolet, chief executive of the LSE, said both Dubai and Qatar - which holds a 15 percent stake in the London exchange – had backed the deal. It is, he said, a “merger of equals”, expected to achieve £35m ($56m) cost savings in a year and £100m ($160.9) in five years.

Borse Dubai said it supported LSE’s efforts to raise value for shareholders.

“Borse Dubai has always been supportive of management initiatives to create shareholder value in the London Stock Exchange,” the company said in a statement on its website.

Dubai-based analyst Ghina Obedi said the move wouldn’t have any immediate implications for Dubai markets.

“Assets of Borse Dubai have simply increased in value, there are no direct implications as such for Dubai,” said Obedi, of Shuaa Capital.

Meanwhile, the merger appears to have sparked another round of consolidation among the traditional bourses, which are under pressure from upstart rivals: with Deutsche Bourse announcing it was in advanced talks to buy NYSE Euronext.

Borse Dubai in December was forced to sell its shares in Nasdaq OMX Group to help pay $1.1bn of a $2.45bn term loan ahead of schedule.

It raised $497m from the sale of 22.78 million shares to Nasdaq and sold a further eight million Nasdaq shares to Investor AB, a holding company for Sweden’s Wallenberg family.

Borse Dubai has approximately $827m of debt maturing in February of this year.

 

*With agencies

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NB 8 years ago

The Americans did it during DP World's bid for some of the US Ports and its likely Canadians will do it as well. I would sell my shares while I can make 25m on them and focus on local and regional opportunities.