London Stock Exchange PLC intensified its verbal jousts with the NASDAQ Stock Market Inc on Tuesday, telling the NASDAQ to "shut up or put up" a higher offering price in its hostile takeover bid for the British bourse.
The two companies have grown more vitriolic in their battle for shareholder support ahead of tomorrow's deadline for LSE investors to accept NASDAQ's US$5.3 billion unsolicited bid. NASDAQ has warned the British exchange is misleading shareholders with overstated growth prospects.
The LSE on Tuesday again goaded the New York-based exchange, telling NASDAQ to increase its offer or the bid won't be considered. NASDAQ responded its bid is "full and fair."
The escalating rhetoric comes amid increasing pressure on stock exchanges to find merger partners so they can compete globally.
"With the continued posturing between NASDAQ and the LSE, as well as the LSE's shares trading 6 percent over NASDAQ's current bid, the ultimate outcome is far from clear," Morgan Stanley analyst Camron Ghaffari said.
A combination of the NASDAQ and LSE would create the world's second trans-Atlantic exchange with about 6,400 listed companies that carry a total market value of $11.8 trillion. Last year, the New York Stock Exchange acquired Paris-based Euronext NV, and several weeks later took a major stake in India's largest bourse, the National Stock Exchange.
The NASDAQ, which owns almost 30 percent of the LSE, appealed to shareholders in a filing with the UK takeover panel that it believes the London market has overstated its trading prospects. The exchange also on Tuesday questioned the LSE's ability to survive as a stand-alone company, and chastised it for categorically rejecting the bid without even sitting down for talks.
The LSE showed no signs of buckling, and rejected the criticism by saying the NASDAQ had not sought "constructive discussion with the exchange." Last week, the LSE offered US$491 million of share buybacks as part of its defense strategy to reject NASDAQ's offer.
At that time, the British exchange also issued a fiscal 2008 forecast for 480,000 average daily trades on its SETS electronic trading platform. This is 39 percent above the level last month, and an increase that the NASDAQ feels is unattainable.
Chris Gibson-Smith, the LSE's chairman, reiterated the exchange's position that the NASDAQ's offer underestimates the true value of the franchise. The exchange -- which has previously fended off hostile bids from rival Deutsche Boerse AG and Australia's Macquarie Bank -- maintained it is worth more considering the growing trend toward stock market consolidation.
Meanwhile, the Tokyo Stock Exchange (TSE) officials said it is in the final stages of alliance talks with the New York Stock Exchange and may announce the content of an agreement at the end of this month.
The two stock exchanges have been discussing cooperating in a range of areas and a possible capital tie-up.
"We are in the final stages [of talks]," TSE president Taizo Nishimuro was quoted as saying by Satoshi Futaki, a bourse spokesman.
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