Nasdaq in hostile $5.3 Billion bid for LSE

Nasdaq Stock Market Inc has made a hostile $5.3 billion bid for London Stock Exchange and only needs one-fifth more of LSE shareholders for it to have control over the bourse. The US Exchange currently owns 28.75 percent of the European Exchange.

Appealing directly to LSE shareholders with a 1,243-pence-per-share bid after being rejected twice by Europe's biggest stock market in the past nine months, Nasdaq is setting a January 11 deadline for the shareholders to accept its offer.

Nasdaq's chief executive Robert Greifeld said "The offer of 1,243p per ordinary share represents a full and fair value for LSE shareholders, taking into account both the successes of the business, but also the new competitive threats which the LSE will face in 2007 and beyond.”

The LSE may run out of options especially when merger talks with British financial markets broker ICAP did not push through earlier this year. The New York Stock Exchange, on the other hand, is currently having merger talks with pan-European exchange Euronext; greatly reducing chances of a possible merger with LSE.

Also, LSE’s former suitors Deutsche Boerse, Australia's Macquarie Bank and even Euronext has long abandoned its intentions of a merger especially since LSE shares are now trading at much higher levels.

If the LSE shareholders accept Nasdaq's offer, the combination of the two exchanges will create a single marketplace for stocks such as Microsoft Corp and BP Plc.

Meanwhile, several companies that include Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, Merrill, Morgan Stanley and UBS are planning to form a new company “to develop a platform that will compete with the LSE and other leading exchanges”.

Shares of LSE fell 4 pence, or 0.3 percent, to 1,316 pence as of 11:32 a.m. in London.

Announcement from Nasdaq has caused the dollar to decline by 3 percent against the pound while Nasdaq shares have dropped 4.5 percent in the last five days.