President George W. Bush said on Thursday US authorities would probe the security implications of a proposed deal that would see Borse Dubai take a stake in the New York-based NASDAQ stock exchange.
The president said in a White House news conference that the proposed tie-up would be examined under a new law introduced this year to assess national security risks posed by US assets being sold off to certain overseas investors.
"We have a reform process in place that will be able to deal with this issue," Bush said. "We're going to take a good look at it, as to whether or not it has any national security implications involved in the transaction."
New US procedures were introduced following a controversy that erupted when Dubai Ports World, another Dubai-controlled company, was forced to abandon the purchase of six US port operations on security grounds.
Borse Dubai and NASDAQ Stock Market Inc, rivals to take over Nordic market operator OMX AB, said on Thursday they had joined forces to acquire it together.
The deal gives Borse Dubai 19.99 percent of US-based NASDAQ and 28 percent of the London Stock Exchange Group Plc.
NASDAQ, the largest US electronic stockmarket said it would voluntarily submit the deal for examination by US authorities.
The mammoth tie-up was already causing a stir in Congress, the scene of a fierce political row which scuppered the Dubai Ports deal last year.
Senate Banking Committee Chairman Christopher Dodd called for a "careful review" of the Dubai/NASDAQ transaction in order to ensure there are no national security implications.
Dodd said he would withhold final comment on it pending the investigation.
"As a general matter I support foreign direct investment in our economy that promotes growth and creates good jobs for our citizens but always in the context of ensuring that our nation's security is protected," Dodd said.
Democratic House of Representatives speaker Nancy Pelosi did not register great concern about the deal.
"I think it is a quite different issue than the ports issue. That was a security issue; this is a marketplace issue," she said.
The NASDAQ deal will be examined under the Foreign Investment and National Security Act signed into law by Bush in July, which reforms the Committee on Foreign Investment in the United States (CFIUS), the interagency body that reviews foreign acquisitions of US companies.
The furor in Congress was sparked by Dubai's state-owned port operator DPW's US$6.9 billion acquisition of P&O, including its subsidiary that operates six US ports.
Although US officials declined to block the deal, the Dubai government decided to abandon DPW's operations at the six ports. DPW said in March it had completed the sale of the disputed unit to AIG Global Investment Group.
The complex takeover proposal unveiled on Thursday ended months of speculation over OMX's fate.
The groups said Borse Dubai of the United Arab Emirates would follow through on its previously announced 230 kronor per share offer for OMX. The Aug. 17 bid valued the group at US$3.97 billion.
NASDAQ would then acquire all of Borse Dubai's OMX shares.
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