LONDON (Reuters) - Nasdaq's purchase of 24.1 percent of the London Stock Exchange may limit the margin for maneuver of potential counterbidders such as the NYSE Group, bankers said on Thursday.
Nasdaq, having said on March 30 it would not make a full offer for the LSE, now cannot bid until the end of September unless certain conditions are met, such as if a rival were to make an offer.
Meanwhile, its stake will affect any counterbidders. Nasdaq paid 1248 pence per share, which makes a counterbid at a lower price unlikely. Under UK law, Nasdaq must offer at least that price for almost a year if it bids for the rest of the LSE.
"Nasdaq are saying 'you can't ignore us in any discussions'," said an investment banker. "Either they will make lots of money by selling to a higher offer, or they will want a concession, such as buying a business, or they could retain a stake."
Rivals that may counterbid include the New York Stock Exchange.
"I do think there will be cross-border consolidation," NYSE Chief Executive John Thain told the Reuters Exchanges and Trading Summit on Tuesday. "I have said before that we want to be a participant in that consolidation process."
Bankers said Nasdaq's holding could not go through 30 percent, because that would force it to make a bid for the rest of the company, but the existence of its stake might also constrain the structure of a rival bid.
The size of Nasdaq's stake would pre-empt a rival from making a bid by using a so-called scheme of arrangement, which can be a faster way of completing a deal and leads to full ownership.
Such a scheme requires 75 percent approval in a vote of the target company's shareholders. Any rival bid would now be unlikely to use this structure, because Nasdaq would probably be able to block it. Continued...
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