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Nasdaq Shrugs Off Rejection From LSE
Nasdaq said its bid would be financed through cash reserves, borrowing and by issuing preferred stock, but gave no details.
Moody's Investors Service put Nasdaq on review for downgrade, suspecting that the deal would largely be financed by debt.
  Sign outside the London Stock Exchange in the City of London, Monday Nov 20, 2006, as Nasdaq Stock Market Inc. on Monday launched a 2.7 billion pounds (4 billion US$5.1 billion) bid to take over the London Stock Exchange, the second offer it has made this year. New York-based Nasdaq offered 1243 pence (18.37; US$23.56) per share, a premium of 54 percent on LSE's closing share price March 10, the day before LSE said it had received an approach. LSE shares traded at 1285 (US$24.36; 18.99) pence in Monday morning trading.( AP photo/Alastair Grant) (Alastair Grant - AP) Partnership
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• "Should the transaction go through, the significant financial leverage will leave Nasdaq little room for error," said Moody's Senior Vice President Peter Nerby. "Execution and rapid de-levering will be key"
A Nasdaq-LSE combination would create the world's largest equity market by value of listed companies, Nasdaq said, with more than 6,400 quoted companies with a total value of about $11.3 trillion.
The London Stock Exchange, Europe's oldest bourse, now takes about half the initial public offerings in Europe including many flotations of Russian and Eastern European companies.
Earlier this month, the LSE reported first-half net profit more than doubled to 54.1 million pounds, or $103.2 million, as electronic trading increased 56 percent and income from initial public offerings rose.
"In the year to October, the exchange has underlined its position as the world's primary listing venue with 22.3 billion pounds ($45.3 billion) raised through IPOs, 96 percent more than the same period in 2005 and more than any other exchange so far this year," the LSE in rejecting the Nasdaq bid.
Still, Fox-Pitt Kelton analyst Andrew Mitchell said the bid was shrewdly timed following last week's slump in the share price below 13 pounds, and that it would be "difficult for London to defend itself."
Earlier this year, Nasdaq made an offer of 9.50 pounds per share for the LSE, but abruptly withdrew it in March. Australia's Macquarie Bank Ltd., Germany's Deutsche Bourse AG and Sweden's OM Gruppen have also all failed in previous overtures to take over Europe's oldest exchange.
Mitchell said Nasdaq has no obvious rivals this time around.
"Deutsche Boerse attempted before at a much lower level and you can't rule them out entirely, but they are an unlikely candidate," he said.
Niclas Lilja, a spokesman for Sweden's OMX, which has previously bid for the LSE, declined to comment on the Nasdaq offer.
"We can comment on our own exchange, not others," he said.
A spokesman for Deutsche Boerse also declined to comment.
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