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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (60249)	5/4/2006 4:03:29 AM
From: shades	Read Replies (1) \| Respond to of 110194

Exchanging Vows . By Robb M. Stewartand Arindam Nag A DOW JONES NEWSWIRES COLUMN LONDON (Dow Jones)--Nasdaq's obviously got its heart set on the London Stock Exchange. The tech-focused American bourse this week raised its interest in its London peer to 18.7% from slightly less than 15% previously, buying an additional 9.79 million shares at GBP12.18 apiece. The purchase, while conducted slightly below the prevailing price, sets a new, raised floor for a stock that has risen some 150% over the past year as takeover speculation mounted. Nasdaq, which walked away from an approach pitched at GBP9.50 in early March, has now firmly stuck its foot in the door at the LSE - and effectively tripped up prospects of a rival bid. It hasn't yet mentioned plans for a revisited offer, but there's little doubt that's where things are headed, eventually. With pan-European bourse Euronext having terminated its 16-month courtship of the LSE and the NYSE having made no advance on the London bourse despite much speculation, Nasdaq has further tightened its grip on the whole saga. And it now has leeway to offer its own shares as part of the eventual consideration - a move that would counter fears it will throw more cash at the LSE than it can comfortably afford. Should there be reluctance on the part of LSE's shareholders to take U.S.-listed shares, Nasdaq could consider a dual listing, trading in London and New York, or even global shares similar to those issued by DaimlerChrysler when the the U.S. and German automakers merged. So far Nasdaq has spent more than $1 billion to build its position in LSE. At the end of the first quarter Nasdaq had around $600 million in cash and liquid investments but nearly $1.2 billion in long-term debt on its balance sheet. That suggests any further borrowing would begin to weigh heavily and increase its risk profile. However, since LSE is trading on a P/E multiple in the 30s - a deep discount to Nasdaq's P/E in the high 50s - the U.S. exchange could craft a paper-and-cash offer that would be earnings-enhancing. Some questions remain about this latest purchase, including the identity of the seller. But if it was further institutional selling then there's a chance hedge funds will move in in force. And they'll have little truck with more of the "just say no" defense that has become the trademark of LSE CEO Clara Furse. The LSE has been fending off a steady stream of suitors for several years running, in a long and convoluted soap opera. The end has been called before for this soap opera, only to be foiled by a fresh twist. But Nasdaq's ardor - and willingness to spring open the wallet - suggests the end is finally nigh. (Robb M. Stewart, founder of the Skeptic column in 2001, has reported for Dow Jones Newswires since 1997 from Sweden and the U.K. He can be reached at +44 20 7842 +287 or by e-mail: robb.stewart@dowjones.com) (END) Dow Jones Newswires May 03, 2006 11:34 ET (15:34 GMT)