Nasdaq Stock Market Inc. has acquired a 15% stake in the London Stock Exchange for 447.5 million pounds ($782 million), less than two weeks after withdrawing its takeover offer for Europe's biggest equity market.
Nasdaq, the largest U.S. electronic stock market, purchased 38.1 million shares for 11.75 pounds each, including a stake held by Threadneedle Asset Management, the LSE's biggest shareholder, New York-based Nasdaq said Tuesday.
The acquisition may force LSE Chief Executive Clara Furse to negotiate with Nasdaq CEO Robert Greifeld, who wants to create the first transatlantic stock market. The price Nasdaq paid was 24% more than its takeover bid, which the LSE rejected.
"The purchase is certainly no bargain," said Benn Steil, director of international economics at the Council on Foreign Relations and an expert on exchanges. "That would suggest, to the extent they have ambitions for a significant merger, they are concentrating on" London.
LSE shares closed at 10.38 pounds in London trading, down from a peak of 12.19 pounds in the days after Nasdaq made its initial bid. In New York, shares of Nasdaq fell 52 cents to $40.85 after rising as much as 9%.
John Wallace, an LSE spokesman, and Bethany Sherman, a spokeswoman for Nasdaq, declined to comment.
Furse rejected Nasdaq's March 9 offer of 9.50 pounds, saying it undervalued the LSE. Greifeld dropped the bid March 30.
The purchase values the LSE at about 3 billion pounds ($5.26 billion), based on the price Nasdaq agreed to pay for its stake. That is equivalent to 25 times the LSE's estimated earnings for the fiscal year ending March 2007.
Nasdaq's purchase makes it harder for prospective suitors such as NYSE Group Inc., Nasdaq's biggest rival, to swoop in with competing offers. NYSE Group Chief Executive John Thain has said he wants to be a leader in consolidating global exchanges.
NYSE Group shares fell $2.93 to $73.12.