Nasdaq Acquires 15% of LSE
A WALL STREET JOURNAL ONLINE NEWS ROUNDUP
April 11, 2006 1:59 p.m.
Nasdaq Stock Market Inc. acquired nearly 15% of London Stock Exchange PLC for about $782 million, less than two weeks after the U.S. stock market operator dropped a takeover bid that was rebuffed by the LSE's board.
In a press release Tuesday, Nasdaq said it acquired 35.4 million LSE shares from Threadneedle Asset Management Ltd., a United Kingdom investment unit of Ameriprise Financial Inc. The shares represented the entire LSE stake held by Threadneedle, the London exchange's biggest institutional shareholder.
Nasdaq said that with another purchase of 2.7 million shares, its total stake in LSE came to 38.1 million shares, or 14.99%. Nasdaq said in its press release that it paid 11.75 pounds each for the shares, or about £447.7 million ($781.7 million) -- well above the £9.50 a share it initially offered.
A Nasdaq spokesman later called it an "important strategic purchase" and declined to comment further.
Less than two weeks ago, Nasdaq pulled1 its proposed $4.2 billion takeover offer for the LSE, marking the third time in 18 months that a would-be suitor has failed to woo the venerable U.K. exchange. It is expected that such a move would kick-start a global consolidation of stock-market operators.
Nasdaq reserved the right to return with another offer under certain circumstances, but the withdrawal was seen as an unexpected setback for Nasdaq Chief Executive Bob Greifeld's ambitions to expand in Europe. Nasdaq's initial offer in early March to buy the LSE was rebuffed by the exchange's board. Both sides had little contact after, though officials from Nasdaq met with some of LSE's top shareholders in London.
Nasdaq officials had grown uncomfortable with the prospect of paying too much for LSE, according to people familiar with the entity's thinking. After Nasdaq announced its offer March 10 of £9.50 a share, LSE shares shot above £11, and some suggested the U.S. exchange would have to pay as much as £15 a share to win LSE -- a price that could hinder Nasdaq's earnings.
Nasdaq, which is being advised by Greenhill & Co., had said at the time it wouldn't bid again within the next six months unless certain circumstances arise. Those include a change of heart by the LSE board or an offer for LSE by a third party. Nasdaq also didn't want to fight a prolonged, public battle with LSE management, the people familiar with the exchange's thinking said.
The U.K. exchange was first put into play in December 2004, when Deutsche Boerse made a proposed offer of about £1.4 billion. LSE twice rebuffed that approach, and the German company was later forced by its own shareholders to withdraw. Late last year, Australia's Macquarie Bank Ltd. launched a hostile £1.5 billion offer, which was below the LSE's market price. LSE's board opposed the offer, and Macquarie's offer failed to attract support.
-- Margot Patrick, Aaron Lucchetti, David Reilly and Edward Taylor
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