LSE seeks talks over Nasdaq raid

By ROSS TIEMAN
Updated:

 

CLARA FURSE, chief executive of the London Stock Exchange, is seeking an urgent meeting with Nasdaq chief executive Robert Greifeld after the US exchange spent £447 million buying 14.99% of the London exchange in a 'dusk raid' yesterday.

Clara Furse

Furse, who has defended the LSE against a series of bid approaches for the past 18 months, will emphasise that she is meeting Nasdaq because it is now the LSE's largest single shareholder. Talks with favoured European bidder Euronext are also likely to proceed with added urgency.

The 1175p a share paid by Nasdaq values LSE at £2.98bn, £580m more than the £2.4bn, 950p-a-share indicative offer withdrawn by Nasdaq on 30 March.

It would have to pay at least that to all shareholders if it launches a takeover in the next 12 months, but it has stolen a march on arch-rival the New York Stock Exchange.

Spreadbetter Cantor Index said the shares should open at around 1160p today, up 12% on last night's official closing price of 1038½p. But Cantor's David Buik said: 'They could go even higher because this is Nasdaq effectively calling the NYSE's bluff.'

When Greifeld made his tentative bid approach in early March, the LSE board rebuffed him and refused to meet him. Analysts say he cannot be ignored this time.

Robert Greifeld of Nasdaq

Michael Long, of Keefe, Bruyette & Woods, said: 'The acquisition of this stake at 1175p a share, or 25.5 times the current year's earnings, may help to get the LSE's attention. The remaining shareholders may also encourage LSE management to hold discussions. Nasdaq has a head start if it were to enter a bidding war with Euronext.'

Under Takeover Panel rules, the US exchange is barred from bidding for the LSE for six months, unless it can win the London board's agreement or there is a rival offer.

Furse has seen off three takeover attempts in the past 18 months, from Deutsche Boerse, Macquarie Bank and Nasdaq. Over that time the LSE's share price has surged from below 350p.

Greifeld, advised by Greenhill & Co, bought the entire 13.8% holding of Threadneedle Asset Management previously the LSE's biggest shareholder, and topped it up with market purchases to the maximum 14.99% allowed under market-raid rules.

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 in the world's most successful financial centre and are pleased to see this value recognised by the market.'

Nasdaq called it 'a very important strategic purchase'.

The move forces Euronext's Jean-François Theodore to up his game. Under pressure from hedge fund investors who want him to merge with Deutsche Boerse, he has promised to come up with a strategic plan by Euronext's annual meeting on 23 May.

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