Borse Dubai would look to expand exchange firm OMX organically and through acquisitions if its $4 billion bid succeeds, its head told Reuters on Monday, adding the deal made industrial sense.
Borse Dubai's cash offer for the Nordic and Baltic bourse owner on Friday trumped an agreed $3.7 billion cash-and-share bid from U.S. exchange Nasdaq.
However, many expect Nasdaq to hit back and OMX shares were up 2.6% at 238 crowns by 1107 GMT, above Dubai's 230 crown offer price, as the market anticipated a bidding war.
Borse Dubai's chief executive Per Larsson said a deal with Dubai made more sense than a deal with Nasdaq as it would give OMX a better platform for international expansion.
"We are looking at organic growth in fast-growing emerging markets ... and we are also going to look at acquisition because we have the goal of being one of the world's biggest bourse groups," Larsson said in a telephone interview.
"We will support their growth in Europe with the financial strength we have."
Focus on Expansion
He said that while there were some synergies in an OMX deal with Nasdaq, there were also conflicts in terms of brand, technology, market models and regulation.
"I have difficulty in seeing why this has industrial logic," Larsson said.
Borse Dubai is a holding company for the Dubai government's stakes in Dubai Financial Market and the Dubai International Financial Exchange (DIFX). DFM shares eased 1.8% to 2.81 dirhams.
Larsson said a merger between Dubai and OMX would not change the regulatory environment and the two groups could focus on expansion. A deal "has industrial logic in general and an industrial logic in our industry."
Larsson said he would be meeting with stakeholders in OMX on Tuesday, Wednesday and Thursday this week. He said OMX shareholders were "very open to discuss our bid."
Some industry watchers have raised questions about how transparent OMX would be if delisted and owned by Dubai.
Wave of Consolidation
The exchange industry has seen a wave of consolidation recently, driven by the need for scale and efficiency 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 has also been eager for a place at the table. It made a failed bid for the LSE this year, but said on Monday it would offload its 31% stake in the bourse.
It said it would use $1 billion of the proceeds to pay off debt and the rest to buy back shares. That in theory could raise the value of its bid for OMX.
OMX, which owns and runs exchanges in Sweden, Denmark, Finland, Iceland and the Baltic states would give Nasdaq greater access to European markets.
OMX's technology, which it supplies to about 60 exchages around the world, is another draw.
OMX Backs Nasdaq
Nasdaq's chief executive Bob Greifeld was in Stockholm on Monday, but declined to comment when asked by Reuters if the bourse planned to raise its bid for OMX.
Price, however, may not be the only issue. Some investors in the Nordic region have also worried firms could be forced to conform to tougher U.S. regulations if Nasdaq's bid succeeds, making OMX a less attractive exchange on which to list.
OMX's management backs the Nasdaq offer and says that a deal would not mean any changes in regulatory oversight.
Borse Dubai said last week it had shares and options that would give it 28.4% in OMX if all options were exercised.
OMX's board is studying Borse Dubai's bid and said it will give its view shortly.
Dubai's Larsson declined to comment when asked if Borse Dubai would raise its bid in answer to any higher offer from Nasdaq.