The Nasdaq Stock Market Inc. formally launched its hostile $5.3 billion takeover bid on Tuesday for the London Stock Exchange Group PLC, which promptly reiterated that the offer is too low and urged its shareholders to take no action on it.
In taking its offer directly to shareholders, Nasdaq slashed the level of acceptances needed for the offer to become unconditional from 90 percent to 50 percent plus one share.
It declined to comment further on the change to the offer, which expires Jan. 11.
The New York-based exchange already owns 28.75 percent of the LSE after building up its stake gradually this year. It said it will not improve its offer of 1,243 pence per share ($24.26) unless a rival bid is made or the LSE drops its opposition.
Nasdaq Chief Executive Bob Greifeld said the deal represents “full and fair value for LSE shareholders, taking into account the successes of the business but also the new competitive threats which the LSE will face in 2007 and beyond.”
However, the LSE board swiftly reiterated its rejection of the offer, saying it “substantially undervalues the exchange and fails to reflect its unique strategic position and the powerful earnings and operational momentum of the business.”
The LSE said it would write to shareholders to explain its reasons and urged them to take no action.
LSE Chief Executive Clara Furse has fended off a series of prospective suitors over the past two years by consistently claiming their offers undervalue the exchange.
“We believe Nasdaq’s final offer fails to recognize the outstanding growth record and prospects of our group on a standalone basis, let alone the Exchange’s unique global position,” Furse said last month when rejecting the Nasdaq approach.
She pointed to the bourse’s record first-half profits and the success of its new electronic order book.
The almost constant spotlight on the LSE since Deutsche Boerse AG made a 1.35 billion pound, or 530 pence per share offer, in December 2004 — approaches or interest from Euronext NV, NYSE Group Inc., Australia’s Macquarie Bank Ltd. and Nasdaq followed — have sent the value of the LSE rocketing.
Its shares have more than trebled from 414 pence before the Deutsche Boerse approach to 1,315 pence ($25.67) on Tuesday — above Nasdaq’s offer price of 1,243 pence.
Financial markets in the United States and across Europe are under pressure to consolidate to create cross-border trading opportunities.
The NYSE Group, owner of the New York Stock Exchange, and Deutsche Boerse moved their sights to Euronext, with the NYSE coming out on top in a bidding battle.
Deutsche Boerse withdrew its offer on Nov. 15, leaving the agreed NYSE offer of $13.7 billion as the only deal on the table for Euronext shareholders, who vote on the proposal Dec. 19. NYSE holders are set to vote the following day. A panel of European regulatory officials recommended approval of the deal last week.
Consolidation pressure further increased last month when seven investment banks, including Goldman Sachs and Citigroup, unveiled plans for a rival European platform of their own to challenge the likes of the LSE.
An LSE combination with Nasdaq would create the world’s largest equity market by listings made up of more than 6,400 quoted companies with a total market capitalization of 6.3 trillion pounds ($12.4 trillion).
The deal has already been given tacit approval by the British government — Treasury Minister Ed Balls said Monday that the government would not block the takeover of the LSE, or any other British company, by foreign investors.