Nasdaq raised the prospect that it may return with a fresh bid for the London Stock Exchange yesterday after it paid £448m for a 15 per cent stake in the company.
The surprise move comes less than two weeks after the US hi-tech stock market ditched a £2.4bn takeover bid worth 950p a share, having failed to win the support of LSE management.
Yesterday it bought 35 million shares at £11.75 apiece from Threadneedle Asset Management, becoming the biggest investor in the LSE.
It paid well over the odds to do so, suggesting it is desperate to have a say in the future of the London market. LSE shares closed up 10.5p at £10.38p as rumours swirled across City trading desks.
The deal was done at 4.06pm and only publicly announced after the market closed. The shares are expected to rise today to roughly in line with the level of the Nasdaq deal - a possible "take out" price for the company.
Nasdaq would only say that the deal was "an important strategic purchase". It declined to elaborate on its intentions.
Analysts point out that it gives Nasdaq leverage to prevent the LSE from doing a deal with Euronext or the New York Stock Exchange. One LSE watcher said: "If they can't have it, they don't want anyone else to have it."
Nasdaq is thought to have approached Threadneedle about acquiring its stake last week. It is being advised by the boutique investment bank Greenhill.
The LSE's banking advisers at Merrill Lynch have held casual talks with Euronext, the pan-European bourse, for at least the past year. Euronext has said it is considering its options and will reveal its intentions in May.
Under Takeover Panel rules, Nasdaq can't make a hostile bid for another six months, having withdrawn its 950p-a-share offer.
There are five scenarios under which the six-month rule doesn't apply, however, including if the LSE agrees a deal with a third party. Having acquired the biggest holding in the LSE, Nasdaq could seek to build its stake in the market, but cannot go above 29.9 per cent while the six-month rules applies.
LSE insiders admitted they had no idea that Nasdaq and Threadneedle were working on a deal. They concede it was reasonable for Threadneedle to sell and book huge profits, given the recent rise in the share price.
The LSE and Nasdaq have no plans to talk as yet, but it is likely that discussions will take place before long as Clara Furse, the LSE's chief executive, seeks to clarify the American company's intentions. A major problem with any tie-up between the LSE and an American exchange is the fear that tough US regulations will be imposed in the UK.
Investors, including Fidelity, that have recently sold stakes in the LSE were left looking red-faced yesterday. Fidelity, once the biggest shareholder with more than 10 per cent, has been gradually offloading stock this year to take profits. Scottish Widows has also been running down its holding.
Nasdaq's move reiterates how vital the LSE is to the future of stock trading across the world. Some European businessmen worry that a tie-up between London and a New York exchange could be a disaster for Germany and France. Werner Seifert, the former chief executive of Deutsche Börse, told Bloomberg yesterday that if London and New York merged, "you basically could say goodbye to the vision of consolidating European capital markets. It's game over then."
The LSE had no comment yesterday. Ms Furse has been fending off takeover offers for the business she runs since 2000. While flattered by the attention, it is thought that she is increasingly frustrated at the interruption to her own plans for the company.
It is now possible that the NYSE will begin building its own stake in the LSE, sending the shares higher still.Reuse content