Nasdaq plans to keep LSE stake if hostile bid fails

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The Independent Online

Nasdaq yesterday backtracked on threats to sell its 29 per cent share in the London Stock Exchange should its £12.43-a-share hostile takeover offer fail next week.

Chief executive Bob Greifeld, on a whistlestop tour of London aimed at winning over sceptical investors, said he wanted to retain the stake for "four to six months" after a radical shake-up of Europe's financial markets comes in in November. He also refused to predict victory saying: "It is too soon to say. All the action will be in the last three days."

The shake-up - prompted by the EU's Mifid directive - will force brokers to seek the best possible price when trading shares for clients, and is aimed at creating cross-border share trading and a single market for financial services.

Mr Greifeld argues it will impose vastly greater competitive pressures on the LSE, by making possible new ventures such as Project Turquoise - the pan-European share trading platform planned by investment banks.

He said: "At the moment we have a disagreement with the LSE board about the impact of that competition. We want to maintain the optionality [sic] to sell our stake should we need to, but it is our intention to hold the stake until four to six months post-Mifid."

Previously Nasdaq raised the prospect of a quick sale of its stake, warning this might cause a sharp fall in the LSE's shares should its hostile bid fail. It was seen as a way of upping the pressure on the hedge funds that will decide the LSE's future.

The LSE has strongly rejected Nasdaq's arguments, saying there is already a highly competitive environment for share trading in London - as opposed to much of Europe - and previous attempts to launch competing platforms to the LSE have all failed. Its arguments have been gaining ground among shareholders, with Nasdaq so far gaining the support of just 0.63 per cent above the 28.85 per cent it already holds.

Mr Greifeld yesterday adopted a more conciliatory tone towards the LSE's directors than the aggressive language used by the Nasdaq in recent weeks. "We have a disagreement with the London board about [trading] volume expectations and competition. We respect their opinion but we disagree strongly," he said.

Mr Greifeld confirmed Nasdaq has held discussions with Samuel Heyman, the US corporate raider who now holds more than 10 per cent of the LSE's shares. But he said: "He has spoken to us but it is not likely we will speak again and we will not speak again if the bid is not successful."

Mr Greifeld also said the Nasdaq would make no attempt to force an EGM to unseat LSE board members if the bid does not succeed.

LSE shares continued to trade above the Nasdaq's £12.43-a-share offer price, slipping just 1p to £12.99 yesterday.