Borse Dubai Buys Nasdaq's LSE Stake In New Global Partnership

by Phillip Morton, Investors Offshore.com

20 September 2007

It emerged on Wednesday that Borse Dubai has acquired a 28% stake in the London Stock Exchange after agreeing to a complex series of transactions with US technology exchange Nasdaq, creating a global financial marketplace with a footprint spanning the US, Europe, the Middle East and strategic emerging markets.

In a statement issued on September 20, Nasdaq confirmed that Borse Dubai has purchased its 28% stake in the LSE at a price of GBP14.14 per share. Meanwhile Nasdaq has agreed to become a strategic shareholder in the Dubai exchange. In addition, Borse Dubai will take a 19.99% stake in Nasdaq, but hold only 5% of the voting rights. Borse Dubai will also rebrand under the Nasdaq banner.

Bob Greifeld, President and Chief Executive Officer of Nasdaq revealed that: “These developments herald an important step forward for Nasdaq. Taken together, these strategic actions will provide us with a footprint unlike any other exchange, creating a global exchange leader, with operations in key markets around the world."

The complex combination is intended to strengthen the Nasdaq's position regarding OMX, the Swedish exchange.

"On the closing of the transactions with Borse Dubai, and completion of the proposed combination with OMX AB, we will have the technological infrastructure and the financial strength to serve our customers and to achieve our global ambitions," Greifeld added.

Under the agreements, Borse Dubai will continue its existing offer for OMX of SEK230 per share in cash, and Nasdaq will continue to offer SEK11.4 billion (US$1.7 billion) and 60.6 million Nasdaq shares for OMX.

Upon fulfillment of certain conditions, Nasdaq will withdraw its offer for OMX, and Borse Dubai will open its offer for acceptances. If these conditions are not met by February 15, 2008, or at an earlier date if any of the conditions cannot be met, the agreements will terminate and be of no further effect, and both Borse Dubai and Nasdaq may pursue their respective offers independently.

If the transaction complete successfully, the new entity will be known as The Nasdaq OMX Group, Inc.

These agreements have the unanimous support of the boards of directors of Nasdaq and Borse Dubai, according to the statement.

Greifeld continued: “The combination will create the largest global network of exchanges and exchange customers linked by technology. Since our original announcement of the combination with OMX, we have become even more excited about the prospects for the combined company. The combination provides significant benefits for customers, shareholders and other stakeholders in both companies. We are pleased that our agreement with Borse Dubai allows this deal to be completed in the best fashion for our shareholders, for OMX shareholders and our collective customers around the world.”

Regarding Borse Dubai becoming a shareholder in Nasdaq, Greifeld announced that: “We are pleased that Borse Dubai has decided to become a shareholder in Nasdaq. This better positions New York, as well as the US, to successfully compete with other global financial markets and provides greater certainty around our growth plans, while reinforcing the unique status and strength of Nasdaq’s technology and trading platforms.”

Commenting on the announcements, Essa Kazim, Chairman of Borse Dubai, concluded: “Our primary objective is to build a world class, growth oriented exchange out of Dubai and to become the center for capital markets activities in the emerging markets. By entering into this partnership with Nasdaq, we will benefit from Nasdaq’s world leading brand, technology and platform. In addition, this combination will establish a gateway to large pools of liquidity.”

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