Nasdaq Strikes Deal With Borse Dubai

Essa Kazim, shairman of Borse Dubai, left, and Nasdaq CEO Robert Greifeld gestures during news conference Thursday Sept. 20, 2007 in Stockholm. Nasdaq Stock Market Inc. and Borse Dubai have reached a deal under which Nasdaq will take over Nordic bourse operator OMX AB, while Borse Dubai acquires just under 20 percent of Nasdaq and 28 percent of the London stock exchange. (AP Photo/Mats Andersson) (Mats Andersson - AP)

The Qatar Investment Authority said it intends to be a long-term shareholder in LSE. It ruled out a takeover bid for the time being, but said it reserved the right to change that position if someone else announces an intention to bid.

LSE shares soared 11.6 percent to 1,621 pence ($32.53) on Thursday. Borse Dubai is paying 1,414 pence ($28.38) per LSE share in its deal with Nasdaq.

OMX shares gained 8.9 percent to 262 kronor ($39.58). Nasdaq Stock Market shares rose $1.86, or 5.2 percent, to $37.85 in morning trading Thursday.

Nasdaq had made a $3.7 billion cash-and-share offer for OMX in May, a proposal supported by both boards and key OMX shareholders. Borse Dubai launched its challenge on Aug. 17 with an unsolicited $4 billion cash bid.

The competing offers led to speculation that Nasdaq would be forced to raise its bid or make some other arrangement with Dubai, involving its stake in the London Stock Exchange.

Nasdaq had said last month it would sell its 31 percent stake in the LSE to focus on the battle for OMX. It said Thursday it would sell 28 percent to Borse Dubai to pay down about $1 billion in debt and initiate a stock buyback.

The deal is subject to approval by shareholders and regulators in Europe and the United States. Nasdaq and Borse Dubai said the agreements had unanimous support in both boards and that they planned to "submit voluntarily the transaction for consideration by the U.S. government."

U.S. Sen. Charles E. Schumer, chairman of the Joint Economic Committee and a senior member of the Senate Banking Committee, expressed doubts about the deal, saying it "will raise serious questions that will need to be answered."

While Borse Dubai would hold a 19.99 percent stake in Nasdaq, the companies said the agreement would cap Dubai's voting rights at 5 percent _ perhaps to help assuage any concern about a Middle Eastern government owning a sizable chunk of a U.S. exchange.

Greifeld told reporters in Stockholm he believed the U.S. Securities and Exchange Commission would be "positive" toward the agreement.

"It's a good transaction for the U.S. capital markets system and it will make sure that Nasdaq is a key player in the global consolidation," he said. "It's our job to communicate that to legislators and regulators and clearly."

Dubai, a Persian Gulf city-state that is part of the United Arab Emirates, has been an aggressive suitor of businesses and tourists as it seeks to diversify its economy beyond its oil wealth, which has helped fuel its building boom and make it a big business hub.

The companies also said that at a later time Nasdaq and OMX would be joined in a new company called The Nasdaq OMX Group Inc. They also said Nasdaq will invest in the Dubai International Financial Exchange, DIFX, which is owned by Borse Dubai.

"This is a pure win situation. It's a win for OMX, its a win for Nasdaq and a win for Dubai," said Per E. Larsson, chief executive of DIFX.

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Associated Press writers Louise Nordstrom in Stockholm and Tim Paradis in New York contributed to this report.