LSE Pours Scorn On Nasdaq's Latest Offer

by Phillip Morton, Investors Offshore.com

26 January 2007

The board of the London Stock Exchange has denounced the latest approach by the US technology-laden exchange Nasdaq, which is seeking to acquire the LSE, as a "wholly inadequate offer".

In a statement released on Tuesday, the LSE suggested that Nasdaq's pessimistic forecast for the LSE's future prospects was serving the US exchange's own interests by attempting to drive down the price of the London bourse.

"The Board believes it is increasingly clear that Nasdaq’s interests are not aligned with those of other shareholders," the LSE said.

"Nasdaq’s self-serving criticism of the Exchange’s growth prospects underlines its obvious need to acquire it - albeit on the cheap. The document published by Nasdaq today is once again long on rhetoric and short on valuation arguments," the LSE board added.

However, the statement went on to add that: "We are pleased that Nasdaq acknowledges the superiority of the Exchange’s performance in attracting new international listings."

According to the LSE, IPOs on the LSE's small cap market, the Alternative Investment Market (AIM) alone raised a similar amount of new capital to that raised on the whole of Nasdaq in 2006.

"At no stage has Nasdaq attempted to pursue any constructive discussion with the Exchange," the statement continued. "In November 2006, it simply made public a second unsolicited approach – this time at an even lower multiple than its previous approach. Since announcing its offer, Nasdaq has made no attempt to contact the Exchange."

"As Nasdaq continues to offer entirely the wrong price, the Board of the Exchange has been forced to conclude that it is not in shareholders' interests to engage with Nasdaq. The Board continues to explore opportunities that would expedite the full realisation of its vision to be the world’s capital market and deliver increasing value to shareholders."

Clara Furse, Chief Executive Officer of the Exchange, stated that: “The Exchange’s trading growth has exceeded that of all major listed equity and derivatives exchanges in Europe and the United States. Nasdaq’s approach is clearly intended to undermine the perception of the true value of the London Stock Exchange. Our shareholders deserve more.”

Chris Gibson-Smith, Chairman of the Exchange, concluded: “The Board firmly believes that Nasdaq’s offer does not even give standalone value. The Board will continue to defend steadfastly shareholders’ interests and we await any indication from Nasdaq regarding an offer price that the Board could recommend to shareholders. It is time for Nasdaq to shut up or put up.”

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