London Stock Exchange
In December 2005, the London Stock Exchange rejected a £1.6 billion takeover offer from Macquarie Bank. The LSE described the offer as "derisory", a sentiment echoed by shareholders in the exchange. Shortly after Macquarie withdrew its offer, the LSE received an unsolicited approach from NASDAQ valuing the company at £2.4 billion. This too it duly rejected. NASDAQ later pulled its bid, and less than two weeks later on April 11, 2006, struck a deal with LSE's largest shareholder, Ameriprise Financial's Threadneedle Asset Management unit, to acquire all of that firm's stake, consisting of 35.4 million shares, at £11.75 per share.[3] NASDAQ also purchased 2.69 million additional shares, resulting in a total stake of 15%. While the seller of those shares was undisclosed, it occurred simultaneously with a sale by Scottish Widows of 2.69 million shares.[4] The move was seen as an effort to force LSE to the negotiating table, as well as to limit the LSE's strategic flexibility.[5]
Subsequent purchases increased NASDAQ's stake to 25.1%, holding off competing bids for several months.[6][7][8] United Kingdom financial rules required that NASDAQ wait for a period of time before renewing its effort. On November 20, 2006, within a month or two of the expiration of this period, NASDAQ increased its stake to 28.75% and launched a hostile offer at the minimum permitted bid of £12.43 per share, which was the highest NASDAQ had paid on the open market for its existing shares.[9] The LSE immediately rejected this bid, stating that it "substantially undervalues" the company.[10]
NASDAQ revised its offer (characterized as an "unsolicited" bid, rather than a "hostile takeover attempt") on December 12, 2006, indicating that it would be able to complete the deal with 50% (plus one share) of LSE's stock, rather than the 90% it had been seeking. The U.S. exchange did not, however, raise its bid. Many hedge funds had accumulated large positions within the LSE, and many managers of those funds, as well as Furse, indicated that the bid was still not satisfactory. NASDAQ's bid was made more difficult because it had described its offer as "final", which, under British bidding rules, restricted their ability to raise its offer except under certain circumstances.
In the end, NASDAQ's offer was roundly rejected by LSE shareholders. Having received acceptances of only 0.41 per cent of rest of the register by the deadline on 10 February 2007, Nasdaq's offer duly lapsed[1]. Responding to the news, Chris Gibson-Smith, the LSE's chairman, said: "The Exchange’s strategy has produced outstanding results for shareholders by facilitating a structural shift in volume growth in an increasingly international market at the centre of the world’s equity flows. The Exchange intends to build on its exceptionally valuable brand by progressing various competitive, collaborative and strategic opportunities, thereby reinforcing its uniquely powerful position in a fast evolving global sector."[11]
On Monday, 20 August 2007, NASDAQ announced that it was abandoning its plan to take over the LSE and subsequently look for options to divest its 31% (61.3 million shares) shareholding in the company in light of its failed takeover attempt.[12] In September 2007, NASDAQ agreed to sell the majority of its shares to Borse Dubai, leaving the United Arab Emirates-based exchange with 28% of the LSE.[13]
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Structure
The London Stock Exchange has four core areas:
Equity markets - enables companies from around the world to raise the capital they need to grow. The Exchange offers a choice of four primary markets; Main Market, Alternative Investment Market (AIM), Professional Securities Market (PSM) and Specialist Fund Market (SFM).
Trading services - a highly active and efficient market for trading in a wide range of securities, including UK and international equities, debt, covered warrants, exchange traded funds (ETFs), Exchange Traded Commodities (ETCs), reits, fixed interest, contracts for difference (CFDs) and depositary receipts.
Market data information - The London Stock Exchange provides high-quality, real-time prices, news and other financial information to the global financial community.
Derivatives - The derivatives business is a pioneering diversification beyond our core equity markets. A major contributor to our derivatives business is EDX London, created in 2003 to bring the cash equity and derivatives markets closer together.
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Levels
- Listed companies 2,749.[14]
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Downtime
On 7th November 2007 LSE had a 40 minute outage. The LSE stated this was due to "connectivity issues".
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See also
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Further reading
- Michie, R. C. (1999). The London Stock Exchange: A History. Oxford: Oxford University Press. ISBN 0198295081.
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References
- ^ London Stock Exchange - Our history
- ^ "On This Day: July 20, 1990: IRA bombs Stock Exchange", BBC News, 1990-07-20.
- ^ Patrick, M.; Lucchetti, A., Reilly, D., Taylor, E.. "Nasdaq Acquires 15% of LSE", The Wall Street Journal, 2006-04-11.
- ^ "Scottish Widows says has sold 2.7 mln LSE shares at 1,175 pence", Forbes, 2006-04-12.
- ^ Ortega, E.. "Nasdaq Buys 15 Percent Stake in LSE for $782 Million", Bloomberg News, 2006-04-11.
- ^ MacDonald, A.; Lucchetti, A.. "In LSE Stakes, Nasdaq Advances, Euronext Falls", The Wall Street Journal, 2006-05-04.
- ^ Lucchetti, A.; MacDonald, A.. "Nasdaq Lifts Its LSE Stake to 24%", The Wall Street Journal, 2006-05-11.
- ^ Goldsmith, B.; Elliott, M.. "Nasdaq raises LSE stake, making rival bids harder", Reuters, 2006-05-19.
- ^ Lucchetti, A.; MacDonald, A.. "Nasdaq Makes Bid to Buy Rest of London Stock Exchange", The Wall Street Journal, 2006-11-20.
- ^ "LSE rejects £2.7bn Nasdaq offer", BBC News, 2006-11-20.
- ^ "Statement re lapse of Nasdaq’s offer", londonstockexchange.com, 2007-02-10.
- ^ "Sale Update", reuters.co.uk, 2007-08-20.
- ^ Magnusson, N.; McSheehy, W.. "Dubai to Buy Stakes in Nasdaq, LSE; Strikes OMX Deal", bloomberg.com, 2007-09-20.
- ^ List of Companies. londonstockexchange.com.
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External links
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