Nasdaq seen as key partner in Stock Exchange bid

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The Independent Online

Nasdaq, the US hi-tech stock market, has held talks with three other groups - OM Group, the Swedish bidder for the London Stock Exchange, EuroNext, the French, Dutch and Belgian grouping, and Deutsche Börse, the Frankfurt exchange - about joining a possible consortium bid for the LSE.

Nasdaq, the US hi-tech stock market, has held talks with three other groups - OM Group, the Swedish bidder for the London Stock Exchange, EuroNext, the French, Dutch and Belgian grouping, and Deutsche Börse, the Frankfurt exchange - about joining a possible consortium bid for the LSE.

Nasdaq, which is headed by chairman Frank Zarb, is seen as pivotal to the success of any bid or merger proposal for the LSE. It is being assiduously courted following OM's hostile bid, which last week led to the scrapping of the controversial iX merger with Frankfurt.

UK brokers have publicly criticised Gavin Casey, the LSE Chief Executive who walked the plank on Friday, for having rejected a two-way merger with Nasdaq last autumn. He turned down the deal despite having been urged by Gordon Brown, the Chancellor to consider a transatlantic merger.

Nasdaq was part of the iX deal on paper. However, impatience with the failure of the leadership of the LSE and Deutsche Börse to flesh out the initial understanding into something more substantial was one of the reasons for the growing dissatisfaction among LSE shareholders with the iX deal.

Nasdaq has, up to now, in public stuck by its commitment to the London-Frankfurt deal. But that is no longer a constraint now that merger is officially dead.

OM executives refused to comment officially on the possibility of bringing in Nasdaq as a partner. However, privately, there is an increasing sense that a link-up with Nasdaq is the only way OM would be in a position to overcome the widespread feeling in London that its offer is opportunistic and lacks credibility.

Werner Seifert, chief executive of the Frankfurt Börse, is working flat out with his advisors at Goldman Sachs and Deutsche Bank on a £1bn counter-strike, but is also seeking to involve Milan, Madrid and Nasdaq in order to dilute the threat of it being seen as a German takeover. EuroNext, whose merger will be completed formally on Friday, is also keen to be involved in an LSE deal.

Mr Seifert believes that the big investment banks who dominate the City of London still want a pan-European deal, and would back a Frankfurt offer, while a large cash element would allow the dissident brokers who scuppered the iX proposal to be bought out.

However, many of the big players in the City believe that EuroNext, which has offered to allow London to take the driving seat in regulation and clearing, could be a better option than the German one.

However, the sense in London after the blood-letting of last week is that there is little stomach for it to be taken over or even to resume merger talks at the moment.

Brian Winterflood, who played a pivotal role in last week's events, said at the weekend that the priority for the London Stock Exchange was to find a new Chief Executive and get its house in order.

"Per Larsson, OM's chief executive, would make a great chief executive but not in the current circumstances. First we have to get rid of this idea of a takeover bid. If OM were to go away and maybe come back and buy a 10 per cent stake that is another matter," he said.

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