NASDAQ Stock Market Inc, which operates the second-largest
stock market in the world after NYSE, has made an unsolicited
bid for London Stock Exchange (LSE). The all-cash bid
revealed on Friday is worth $4.1 billion and led to a
huge rally in the NASDAQ stock.
the LSE has rejected the bid stating that it is too low.
The bid was made at a premium of around 8 per cent to
Friday's closing price of LSE stock. NASDAQ had made an
attempt to acquire LSE in 2002 which failed because of
regulatory issues in the US and Europe.
the rejection from LSE, NASDAQ may sweeten the bid by
offering part cash and part stock to the shareholders
of LSE. Such a deal would help LSE shareholders to benefit
from the gains of consolidation.
the deal goes through, the combined exchange would have
around 6,000 companies listed on it with a market capitalisation
of more than $7 trillion.
consolidation moves between major stocks exchanges seems
to be gathering pace. LSE is a major target for such moves
because of its reputation and the large number of companies
listed. Over the last couple of years, German stock exchange
Deutsche Boerse and Macquarie Bank of Australia had made
unsolicited bids for LSE. Both pervious bidders had quoted
a much lower price than the latest one from NASDAQ.
is expected that NYSE, the world's largest stock exchange,
would also bid for LSE. US based exchanges are struggling
to get more and more foreign companies to list on them
because of some tough regulations like Sarbanes-Oxley
Act and higher costs. Hence they are increasingly getting
interested in global alliances and acquiring other exchanges.
got itself listed for trading last week, a move widely
seen as an attempt to facilitate future acquisitions through
has been some consolidation between US exchanges as well.
NYSE merged with online exchange Archipelago last year
while NASDAQ had earlier acquired Instinet.