Nasdaq now requires just over 20% of stake to take over LSE |
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Wed, 13 Dec 2006 09:50
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LONDON: U.S. stock exchange Nasdaq, which has launched a 2.7-billion-pound hostile bid for the London Stock Exchange Tuesday, requires a fifth of the exchange's shareholders to accept the offer in order to take over the exchange.
The technology-focused electronic exchange, spurned by the LSE twice in the past, is approaching the shareholders directly with its 1,243-pence-per-share offer.
Nasdaq has already acquired 28.75 per cent of London Stock Exchange Plc.'s holding from the market. It has now lowered the level of shareholders it needs to agree to its bid to 50 per cent from an earlier specification of 90 per cent. This will mean only 21.3 per cent of the LSE shareholders need to vote in favor of the bid. The last date of acceptance is 11 January.
The LSE's board said it unanimously rejects Nasdaq’s offer as it "substantially undervalues the exchange and fails to reflect its unique strategic position and the powerful earnings and operational momentum of the business.”
Under the U.K. takeover law, the LSE has now time till 26 December to come out with its justification for not accepting the offer and until 20 January to outline its full defense. Nasdaq will have to make final changes, if required, to its offer before 27 January.
Nasdaq cannot raise its offer unless it receives a recommendation from the LSE's board, or unless another bidder comes in. If Nasdaq neither reaches the simple majority by the extended 10 February deadline nor engages the London exchange’s board in discussions, it will have to walk away from the offer and cannot make another bid for a year.
The LSE has been expecting British financial markets broker ICAP Plc to come out with a proposal to merge. ICAP has not responded now. In the circumstances, analysts feel the LSE has hardly any options but to allow the takeover. It can bargain for a better price. They also say Nasdaq will be able to secure the 21 per cent holding it is now expecting without much effort.
LSE shares traded at 1,320 pence Tuesday.
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