NASDAQ-LSE offer may not go through

The tech-heavy U.S. exchange NASDAQ’s attempt to build a trans-Atlantic stock exchange seems to be going in vain. The NASDAQ stock exchange disclosed that hardly a handful of London Stock Exchange (LSE) shareholders had accepted its £12.43 a share hostile takeover bid.

Analysts feel that the NASDAQ offer would look more attractive to investors over the next few weeks when they will realize that the exchange (NASDAQ) is not making a higher bid and no other bidder is entering the fray.

Investors have to actually tender their shares till February 10 for a deal to consummate. As on date, NASDAQ’s bid has lured shareholders controlling a minimal 0.6 per cent of the London exchange's shares.

This is in addition to the 28.75 per cent NASDAQ already owns, giving it a total of 29.3 per cent. NASDAQ thus needs just over 21 percent more to take control.

LSE officials said that the low interest espoused by the British Exchange shareholders reflects the view that NASDAQ’s bid significantly undervalues the 308-year-old marketplace. NASDAQ has hinted that it could reduce its holdings, but many investors said they believed that was a bluff designed to get them to tender their shares.

Shares of the London Stock Exchange have fallen in the past week, as investors who were hoping for a higher price than NASDAQ’s initial £12.43 a-share bid head for the door. But they rose 12 pence, or nearly 1 percent, to close Friday at £12.95 in London.

The NASDAQ chief executive, Bob Greifeld, and his London Stock Exchange counterpart, Clara Furse, have never talked about the deal face to face. In urging investors to reject NASDAQ’s bid, the London exchange has pledged to raise its dividend by at least 50 percent.

The exchange also plans to cut trading fees on its markets to head off competition from investment banks that are planning their own electronic trading system.

Relations between the two exchanges (NASDAQ and LSE) have deteriorated in recent times. Exchange of hostile, taunting press releases have become the order of the day. The outcome of the $5.3 billion hostile bid is just a fortnight away.