BURSA LONDONEZA

Nasdaq Bids for LSE to Create Trans-Atlantic Market (Update3)

By Nandini Sukumar
Nov. 20 (Bloomberg) -- Nasdaq Stock Market Inc. made its second bid
for London Stock Exchange Group Plc this year, an unsolicited offer
that values Europe's biggest equity market at about 2.7 billion pounds
($5.1 billion).
Nasdaq, the largest U.S. electronic equity exchange, bid 1,243 pence a
share in cash for the 75 percent of LSE it doesn't already own, the
company said in a statement today. The U.S. market bought an
additional 7.1 million shares and said it's seeking a meeting with LSE
Chairman Chris Gibson-Smith to secure a recommendation of its offer.
The London market has rebuffed four suitors since December 2004 when
Deutsche Boerse AG started the bidding, provoking rival Euronext NV to
declare its interest in LSE. The two were followed by Sydney-based
investment bank Macquarie Bank Ltd. and then, in March this year, by a
2.4 billion-pound bid from Nasdaq that was rebuffed. An LSE-Nasdaq
combination would create a single marketplace for stocks such as
Microsoft Corp. and BP Plc and would give foreign companies a way to
tap American investors without having to meet U.S. regulatory
requirements.
``It's been almost two years now that LSE has been in play and
shareholders may be willing to accept a slightly higher bid from
Nasdaq,'' said Mamoun Tazi, an analyst at Man Securities in London.
``Investors could be willing to go with a bid of between 1,300 pence
to 1,350 pence a share from Nasdaq.''
Shares Rise
LSE shares rose 72 pence, or 5.9 percent, to 1,290 pence as of 9:20
a.m. in London, trading above Nasdaq's offer price and bringing gains
this year to 108 percent. The stock has surged almost threefold from
the 430 pence a share it traded on Dec. 10 2004, the day before
Deutsche Boerse kicked off the bidding for the U.K. market.
Nasdaq reserved the right to revise its offer if it gets a
recommendation from the LSE or if another company says it's planning
to bid for the U.K. market.
``The 1,243 pence a share truly is a full and fair offer,'' Nasdaq
Chief Executive Officer Robert Greifeld said on a conference call with
journalists, adding he hopes to meet LSE today to discuss his offer.
``It's important for us to engage with the board of LSE.''

After Furse rejected Nasdaq's earlier offer of 950 pence a share, the
U.S. exchange began accumulating a stake in LSE, making it the largest
shareholder.
`Only One LSE'
``There is only one LSE and there is some rarity value there,'' said
Roger Nightingale, a strategist at Millennium Global Investments in
London, which oversees $4.3 billion. ``Also, stock exchanges are
making a lot of money these days so it may well be worth it.''
Securities markets worldwide have announced about $35 billion of
combinations over the past two years as they seek to meet growing
demand by investors for low cost, electronic trading of multiple
securities in different time zones.
Last week, Deutsche Boerse scrapped its offer to buy Euronext,
clearing the way for NYSE Group Inc., Nasdaq's larger U.S. rival, to
acquire the Paris-based exchange and create the first trans-Atlantic
stock market.
Investment Banks' Venture
In another sign competition is set to intensify, seven investment
banks including Citigroup Inc. and Goldman Sachs Group Inc. are
planning to start their own pan-European equity trading system to
challenge traditional bourses such as LSE. Concern the plan may reduce
revenue at LSE, which charges banks for buying and selling stock,
sparked a decline of as much as 10 percent in the U.K. stock market's
share price on Nov. 15.
U.K. takeover rules stipulated that Nasdaq couldn't make another offer
for all of LSE until the beginning of October, six months after March
30, when Nasdaq dropped its first takeover bid. At a minimum, Nasdaq's
latest takeover offer had to equal the highest price per share it paid
for the stake it bought in the company, according to the rules.
A combination would ``form the leading global, cross-border equity
market platform, giving issuers the ability to dual-list
simultaneously in London and New York,'' said Greifeld. ``The combined
entity will be well positioned to lead further consolidation and
compete effectively for the benefit of all market users.''
After LSE's capital return and share consolidation, the lowest price
Nasdaq could bid for LSE is 1,243 pence a share if it wanted to bid
before May 2007. After May 2007, Nasdaq would be free from price
restrictions.

The offer is Nasdaq's third attempt to combine with LSE. Talks between
the two, involving Nasdaq's then-CEO Hardwick Simmons, broke down in
2002 after U.S. and U.K. regulators failed to agree on how to oversee
the combined market. Then Nasdaq bid for LSE again in March this year
and was rejected.