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Wed, Dec 13, 2006 - Page 10 News List

NASDAQ proceeds with LSE takeover bid despite rebuff

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NASDAQ Stock Market Inc said it will proceed with a ?2.7 billion (US$5.3 billion) hostile bid for the London Stock Exchange Plc after Europe's biggest equity market rejected the approach three weeks ago.

The second-largest US stock exchange, which already owns 28.75 percent of the London Stock Exchange (LSE) and has bid ?12.43 a share in cash for the rest, said it was seeking acceptances from LSE shareholders by Jan. 11, next year.

Shares of LSE closed on Monday at ?13.20.

NASDAQ is appealing directly to shareholders after the LSE rejected two offers in nine months. Some analysts believe the LSE may be running out of options after British financial markets broker ICAP decided not to pursue fresh merger talks.

The bid ``represents full and fair value for LSE shareholders, taking into account both the successes of the business, but also the new competitive threat which LSE faces in 2007 and beyond,'' NASDAQ chief executive officer Robert Greifeld said in a statement.

A combination would create a single marketplace for stocks such as Microsoft Corp and BP Plc, pitting NASDAQ and LSE against NYSE Group Inc and Paris-based Euronext NV, which are planning to merge the New York Stock Exchange with equity markets in Lisbon, Paris, Amsterdam and Brussels.

LSE rejected NASDAQ's request to discuss its offer on Nov. 20, saying it ``substantially undervalues'' the company. Hedge fund investors, led by Samuel Heyman, have bought stakes in the UK exchange through the derivatives market at prices higher than NASDAQ's offer on speculation the bid will be sweetened.

"Our high leverage limits our financial flexibility," NASDAQ said in the statement yesterday.

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