September 2, 2007
Qataris in £1bn swoop on LSELouise Armitstead
QATAR has joined the fight for supremacy over European stock markets by making an indicative offer of close to £1 billion for Nasdaq’s one-third stake in the London Stock Exchange (LSE).
The approach, which has been planned as a knock-out bid, was made last week by representatives of the Qatari Investment Authority. They presented their case to investment bankers at UBS, who have been appointed by Nasdaq to handle the sale of its 31% holding in the LSE.
The Qataris have indicated that they could be willing to pay as much as £15 a share for the stake, valuing the whole LSE at nearly £3 billion. On Friday, LSE shares closed at £13.66. The Gulf investors have not ruled out making a full bid for the LSE at a later date.
Their audacious move signals the start of a battle between three super-rich city states ? Dubai, Singapore and Qatar ? for control of Europe’s stock exchanges.
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The governments of these states have ambitions to fill the gap for a major global stock exchange between Europe and Asia and become the dominant financial centre in the region.
As revealed by The Sunday Times last week, Temasek, the investment group backed by the Singapore government, is also considering buying Nasdaq’s stake in the LSE.
Sources said the Qataris were already aware that Temasek had approached Nasdaq when they first explored with their advisers the possibility of making an offer themselves.
The LSE stake has been put in play by the manoeuvring for control of OMX, the Scandinavian stock exchange. In May, Nasdaq agreed to buy OMX for $3.7 billion (£1.3 billion) in cash and shares.
But three weeks ago Borse Dubai, the owner of Dubai’s two stock exchanges, made a $4 billion cash offer for OMX.
Dubai, which is being advised by HSBC and has said it wants to become the third-biggest stock-exchange group in the world, is prepared to raise its offer.
To fund its fight with Dubai over OMX, Nasdaq has put its LSE shares up for sale.
A source said: “Dubai’s bid for OMX has presented a real threat to others in the region. There are concerns that a tie-up with a European exchange would suddenly attract all the liquidity in the region. The view is that whoever is first with an advanced exchange will go on to dominate. As such, they don’t mind, within reason, overpaying compared with other trade buyers.”
In December 2004, Deutsche Börse made a £1.3 billion offer for the LSE. Macquarie, the Australian bank, made a £1.5 billion bid a year later. In March 2006, Nasdaq stormed in with a £2.4 billion offer, which was rejected by LSE chief executive Clara Furse.
Dubai’s bid for OMX has been overshadowed by complaints from the Swedish authorities that HSBC and Linklaters broke stock-market regulations when they bought the original 27% stake in OMX last month. Two weeks ago, Sweden’s FSA ruled that Borse Dubai should have bid for the whole of OMX when it bought the stake but, since a bid had followed, no action would be taken.
Tomorrow the National Economic Crimes Bureau (EBM) is to announce whether it will investigate allegations of insider trading during the same transaction.
Meanwhile, Dubai launched a charm offensive with OMX’s biggest shareholders, Nordea and Investor, telling them they would each be offered a place on the board of the new company.
Per Larsson, chief executive of Borse Dubai, said: “We don’t want to change existing regulatory, legal or operating frameworks. We want to invest in technology and connections between exchanges.”
Temasek’s interest in stock exchanges alongside that of Dubai has echoes of last year, when Temasek tried to gatecrash Dubai Ports World’s takeover of P&O, the ports company.
business.timesonline.co.uk |
