LSE shares soar on talk of higher bid from Nasdaq

Shares in the London Stock Exchange surged to an all-time closing high yesterday amid speculation that Nasdaq might seek to raise its £12.43-a-share hostile takeover bid.

They closed up 29p at £13.45, valuing the exchange at £2.9bn, £200m above the value of Nasdaq's offer. It comes as the US company prepares to release a final shareholder circular to try to persuade the London exchange's shareholders to accept its offer. Nasdaq holds 28.75 per cent of the LSE's shares and has said it would be prepared to make the offer "unconditional" on acceptances of 50 per cent.

The document is likely to focus on Nasdaq's US growth prospects to try to counter the LSE's allegation that Nasdaq is trying to buy the London exchange on the cheap to transform its own business. Sources close to Nasdaq sought to play down the speculation yesterday, insisting Nasdaq does not believe the LSE is worth more than £12.43 a share. When the company tabled its offer, it insisted that it was a "full and final offer".

But several investors, notably US corporate raider Samuel Heyman who has built up a stake of more than 10 per cent, have been buying LSE shares at prices well in excess of the offer.

The LSE released its final defence document on Thursday and its chief executive Clara Furse said the company was keen to do deals, but not at the Nasdaq's offer price. The exchange also unveiled a £250m share buy-back and accused Nasdaq of "misrepresentation".

The LSE is thought to be holding out for an offer of at least £15 a share, although anything approaching £14 is likely to lead to pressure to open talks.