Europe News

London Stock Exchange Open to Nasdaq Approach

Jeremy Grant, Financial Times

The London Stock Exchange would be open to considering a merger of equals with Nasdaq OMX, the US exchange operator, in the first sign that the British bourse could yet turn its attention to securing its future in another big merger after its attempted tie-up with Canada’s TMX Group collapsed.

NASDAQ MarketSite Tower, Times Square, New York, NY

Nasdaq’s chief executive, Bob Greifeld, is considering an approach for the LSE but people familiar with the matter said advisers were not yet formally involved. Nor had Mr Greifeld spoken with his counterpart at the LSE, Xavier Rolet.

The prospect of the combination revives the vision of a transatlantic exchange powerhouse first pushed by Mr Greifeld five years ago when he made a failed bid for the LSE.

It would combine two of the most recognised brands in the exchange business and provide a counterweight to a larger combination planned by Deutsche Börse and NYSE Euronext amid a wave of exchange consolidation that started last October.

Nasdaq is separately involved as bidder for a minority stake in LCH.Clearnet, an independent clearing house that clears UK stocks for the LSE.

Mr Greifeld’s last, and ultimately hostile, attempt at the LSE involved an offer to shareholders of £12.43 ($20) a share, increased from a friendly offer of 950p.

The LSE’s shares closed at £10.61 on Friday, valuing the exchange at £2.8 billion ($4.5 billion). Nasdaq’s market capitalisation stands at $4.6 billion (£2.86 billion).

One person said LSE management believed the exchanges’ higher share prices in recent weeks suggested the market did not favour an “aggressive leveraged takeover”. An LSE spokesman said it “did not comment on speculation”.

The LSE’s share price has risen 15 percent since mid-May, amid bid speculation even as it tried to finalise its deal with TMX, operator of the Toronto and Montreal bourses.

The LSE abandoned that last week after insufficient support from TMX shareholders.

Mr Greifeld’s last attempted deal, which ended in April after objections from US antitrust authorities, was a $11.3 billion counter-bid for NYSE Euronext, with IntercontinentalXchange as joint bidder.

However, any Nasdaq-LSE deal would have to overcome a number of hurdles. It is not clear which of the men would be chief executive.

Mr Rolet has been in his job since May 2009, while Mr Greifeld has been chief executive of Nasdaq since 2003. A deal would also have to pass UK regulatory scrutiny.

A second person said that while the LSE would consider an approach from Nasdaq, Mr Rolet had made clear recently that the LSE could grow its business independently.

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