Reuters
Wednesday, January 31, 2007; 11:39 PM

LONDON (Reuters) - The Nasdaq Stock Market Inc. <NDAQ.O> would consider working with a group of investment banks behind a rival trading platform if its bid for the London Stock Exchange <LSE.L> fails, Chief Executive Bob Greifeld told three British newspapers.

He also signaled that Nasdaq could keep a stake in the LSE for 18 months before reassessing the situation.

As for the outcome of its hostile bid for the London bourse, Greifeld said it would come down to the last three days before time runs out next week.

Speaking to the Daily Telegraph and the Financial Times in comments published on Thursday, he said Nasdaq officials had met members of Project Turquoise -- a plan by seven banks to create a pan-European equity trading platform later this year.

"My senior people had a meeting with them last week," Greifeld was quoted on the Daily Telegraph's Web site as saying.

Asked whether he would work with the group -- comprising Citigroup Inc. <C.N>, Credit Suisse <CSGN.VX>, Deutsche Bank <DBKGn.DE>, Goldman Sachs Group Inc. <GS.N>, Merrill Lynch & Co. <MER.N>, Morgan Stanley <MS.N> and UBS <UBSN.VX> -- were the LSE bid to lapse, he told the paper: "Yes, I would consider that."

Nasdaq had not initially planned to use its technology to compete with the LSE but was now considering licensing it to the consortium if the U.S. bourse's bid failed, the FT quoted Greifeld, who visited London on Wednesday, as saying.

He was cited as making similar comments in the Times.

The Nasdaq boss also indicated that the establishment of rival trading platforms following the arrival of new EU rules toward the end of the year would impact the LSE's share price.

"In 18 months' time, we will know what is the fair value of the exchange," Greifeld told the FT.

The Markets in Financial Instruments Directive (MiFiD) aims to help create a single market in the European Union for financial services. For example, it will scrap local monopolies in some countries in trading shares.

"Six months after MiFiD we would do a fundamental valuation of the price and the assets (of the LSE)," Greifeld was quoted as saying in the Times newspaper. Until then, he said: "We hold, we look, we do other deals and see how the world plays out."

Nasdaq owns almost a third of the LSE and is offering 1,243 pence a share in cash for the rest, but the offer has been rejected, leaving its fate with shareholders.

The hostile bid, which values the operator at 2.7 billion pounds ($5.28 billion), has until February 10 under U.K. takeover rules either to lapse or go unconditional.

Greifeld was tight-lipped about his prospects for success.

"It's really impossible to say right now. It's going to come down to the last three days. I'm not into reading tea leaves," he said in the Times. But he was determined to stick to his offer price, which is below the LSE's current share price.

"We felt the LSE financials would earn into that price," he told the FT. "It's a monopoly business today. It won't be a monopoly business tomorrow."

In addition, Greifeld said Nasdaq had spoken to investor Samuel Heyman, who holds an interest in the LSE of more than 10 percent, but no future talks were planned, the Times reported.