The Nasdaq Stock Market Inc. today announced what it calls its final offer for the London Stock Exchange Group plc.
The final offer is to be made by Nightingale Acquisition Ltd., a wholly owned subsidiary of Nasdaq, for the entire issued and to be issued share capital of the LSE.
Nightingale is offering £1.243 per LSE Ordinary Share in cash, valuing the entire issued ordinary share capital of LSE at approximately £2.7 billion (US$5.1 billion) and represents an enterprise value of approximately £2.9 billion (based on LSE’s net debt of £284.7 million).
The B share offer is in cash at 200 pence per LSE B Share (plus an amount equal to the accrued dividend), valuing the entire issued B share capital of LSE at approximately £16.5 million.
Following the announcement of the final cash offers, Nasdaq announced that it has acquired 7,065,984 ordinary shares in LSE at a price of £1.243 per share. The total consideration paid for the stake represents £87.8 million (US$166.4 million). This acquisition takes Nasdaq’s total holding in the LSE to 61,291,389 ordinary shares or 28.75% of the issued ordinary share capital of LSE.
Nasdaq said is making this announcement today to ensure that all market participants are properly informed of the details of its final offers. It has requested a meeting with the LSE’s chairman to seek a recommendation of the offers in advance of posting the offer document (which will be undertaken as soon as possible).
The exchange calls its bid an “attractive offer which fully reflects both LSE’s stand alone prospects and an appropriate premium”. It says it does not expect the transaction to give rise to any significant antitrust issues, notes that it is not subject to any other formal regulatory approvals nor does it require Nasdaq shareholder approval. Nasdaq expects the transaction to be complete in the first quarter of 2007.
The exchange says that these final offers will not be revised except that NAL reserves the right to revise them: upon the recommendation of the LSE board; or, if a firm intention to make a competing offer for LSE is announced, whether or not subject to any preconditions.
“Nasdaq and LSE are both pre-eminent equity markets in their respective countries. Nasdaq believes that bringing together the two organisations would present listed companies, traders and investors with a leading global equity market place, based on dynamic industry leadership,” it says. “A transaction presents the potential to create the leading global, cross-border equity market platform giving issuers the ability to dual-list simultaneously in London and New York.”
The combined global exchange would have over 6,400 listed companies with a total market capitalisation of approximately £6.3 trillion (US$11.8 trillion); with an average daily volume of 7.4 billion shares traded, 5.5 million average daily bargains and an average daily value traded of approximately £41.5 billion (US$75.6 billion). It also imagines that a deal would create “significant efficiencies” which would benefit the users of both platforms, and that a combined entity well positioned to lead further consolidation and compete effectively with any transatlantic or European combination.
If the deal goes ahead, Nasdaq says that the LSE’s existing market model, including the Main Market and AIM, will continue to be actively supported and promoted. The combined entity will support open post-trade architecture and will look to promote competition in clearing and settlement. The LSE will continue to be run as a Recognised Investment Exchange regulated solely by the UK Financial Services Authority. Nasdaq reports that it has held detailed discussions with the FSA and is confident that, following the transaction, the LSE will be able to meet its obligations as an RIE.
The LSE will continue to have its own independent board with a majority of independent non-executive directors. Nasdaq will establish a London Oversight Committee, comprised of board user representatives and an independent chairman, to retain veto rights over proposed changes to LSE listing standards and location of the main RIE operations.
Nasdaq also intends to seek a secondary listing in London as soon as practicable following the completion of the transaction.
Commenting on the final offers, Nasdaq president and CEO Robert Greifeld said, “We are excited about the prospect of combining two strong businesses to form the leading global, cross-border equity market platform giving issuers the ability to dual-list simultaneously in London and New York. The combined entity will be well positioned to lead further consolidation and compete effectively for the benefit of all market users.”