Borse Dubai launched a $4 billion cash offer for Nordic exchange owner OMX on Friday, trumping an agreed upon deal with U.S. exchange Nasdaq, in a bid to create a group with global reach.
Borse Dubai, which said it would accelerate OMX's expansion in fast-growing markets, offered 230 crowns per share, valuing OMX at 27.7 billion Swedish crowns ($3.98 billion).
That compared with Nasdaq's cash and share bid currently worth 198 crowns per share or $3.7 billion.
Nasdaq said it remained fully committed to its offer, and urged shareholders to support its bid, citing the opportunity to own a 28% stake in the combined company. It said it remained "in close dialogue" with OMX.
Nasdaq chief executive Bob Greifeld plans to travel to Sweden early next week to meet management and stakeholders in OMX, sources familiar with the matter said.
Borse Dubai, run by former OMX Chief Executive Per Larsson, said in a statement it controls 28.4% in OMX if its options in OMX shares were exercised.
"This combination will establish OMX as the group's global platform, building on OMX's leading technology and strong brand to position it to become one of the fastest-growing major exchange networks in the world," Borse Dubai Chairman Essa Kazim said.
OMX said it was studying the bid and would come back to shareholders shortly. Sources familiar with the matter said Borse Dubai had not yet secured OMX agreement.
A Borse Dubai official, speaking on a conference call after the bid was announced, said the group hoped to complete the deal this year.
Borse Dubai, in the conference call, said there were synergies to be had but it did not specify an amount. It said the businesses of OMX and Borse Dubai were mostly complementary.
Nasdaq said that under a merger, the two exchanges could cut costs by at least $150 million a year on a pretax basis.
Borse Dubai management has been in Sweden this week meeting OMX executives and stakeholders.
The Swedish government, which has a 6.6% stake in OMX, had no immediate comment on the bid.
Investor AB, also a shareholder, said it would analyze the offer, but added it was not clear the Dubai bid presents better value than the Nasdaq offer in the long term.
"We have said before that we see an industrial logic between OMX and Nasdaq and it is not obvious that a cash bid at this level is better in a time frame of a few years, but that is something we will now analyze," Investor spokesman Fredrik Lindgren said.
The pace of consolidation in the sector has accelerated following the demutualisations and public listings of exchanges in the past few years, driven by the need for scale and cost cuts as competition heats up and margins shrink.
NYSE Group, owner of the New York Stock Exchange, in April bought pan-European exchange Euronext, while the London Stock Exchange is in the process of buying Italian rival Borsa Italiana after fending off several unwanted takeover approaches.
Nasdaq also has a significant stake in the LSE following an unsuccessful takeover attempt last year.
One analyst who declined to be named said Nasdaq's bid was a dream scenario for OMX when announced in May. It offers OMX global reach and gives Nasdaq access to European markets and OMX's strong technology platform.
But a number of major investment firms expressed worries at the time that companies listed in the Nordic region could be forced to conform to tougher U.S. regulations if Nasdaq succeeded in its bid.
This might hurt OMX's competitive position and could lead some companies to delist, industry watchers said.
Larsson of Borse Dubai told the conference call the combined group would be a strong global player.
"This combination will form the fifth largest exchange group and the fastest growing and the most innovating major exchange group in the world," Larsson said.
"It will be achieved by connecting OMX leading technology and brand with Borse Dubai infrastructure and access to liquidity in high growth markets."
Borse Dubai is a holding company for the Dubai government's stakes in Dubai Financial Market and the Dubai International Financial Exchange (DIFX).
OMX, in addition to owning and running exchanges in Sweden, Denmark, Finland, Iceland and the Baltic states, provides technology to about 60 exchanges worldwide, including the Australian Securities Exchange, Nordic power market Nordpool and the Singapore Exchange.