| Strategy shift
London/Stockholm, Aug. 20 (Reuters): Nasdaq Stock Market Inc is abandoning its 31 per cent stake in the London Stock Exchange five months after its takeover bid failed and as both pursue separate acquisition strategies in the consolidating sector.
UBS and JP Morgan are helping Nasdaq decide what to do with the 61.3 million LSE shares. Nasdaq said it wanted to sell them, but could not guarantee that it would.
New York-based Nasdaq said it would use $1 billion of any proceeds from a sale to pay off senior term debt and the rest to buy back shares.
It said it was pursuing the sale because it believed its current stock price did not adequately reflect the value of its LSE stake.
Nasdaq estimated the stake sale would boost its standalone 2008 earnings per share by about 30 cents to 35 cents each.
LSE shares were up 2.4 per cent to 1,300 pence each during mid-day trading. Nasdaq shares closed at $31.75 on Friday. LSE officials declined to comment.
Since Nasdaq’s takeover for the LSE failed earlier this year, the LSE has agreed to acquire Milan exchange Borsa Italiana for £1.6 billion ($3.16 billion), a deal set to dilute Nasdaq’s stake to about 22 per cent.
Meanwhile, Nasdaq is now locked in a battle with Borse Dubai to buy Nordic exchange operator OMX.
OMX chairman Urban Backstrom said Borse Dubai’s all-cash bid was not more attractive than Nasdaq’s share-and-cash bid and called it hostile, newspapers reported on Monday.
Backstrom said the industrial synergies from the Nasdaq offer were higher than any from Borse Dubai, though OMX had yet to decide which bid to back, the Wall Street Journal reported.
The Nordic exchange owner is uneasy about being owned by the Dubai government.
“I could never have realised then that another state, a sovereign state, would put a bid for the company,” the Wall Street Journal quoted Backstrom as saying. Backstrom worked in the Swedish ministry of finance when the country was privatising the Swedish stock market in the late 1990s.
“There are many ways to build confidence, but what is going on is quite strange. Usually, you get a phone call the day before a bid is made, but this time I had to read about it on the (Web),” newspaper Dagens Nyheter quoted Backstrom as saying.