Nasdaq maysell LSE stake, focus on OMX
LONDON/NEW YORK (Reuters) - Nasdaq Stock Market Inc (NDAQ.O), under pressure to expand overseas, may sell its one-third stake in the London Stock Exchange (LSE.L) to bolster its chances of buying Nordic exchange operator OMX OMX.ST.
Nasdaq CEO Robert Greifeld told analysts during a conference call on Monday that investment bank advisers were already in touch with interested parties, and he was confident that bidders would surface.
Nasdaq later said in a statement it would not sell its LSE stake to any single buyer.
Greifeld said the value of Nasdaq's market capitalization did not reflect the LSE stake, which would be a "source of constraint."
While there have been successful exchange mergers, like the one that created NYSE Euronext (NYX.N) earlier this year, the LSE has rebuffed Nasdaq, leaving the largest U.S. electronic stock market locked in a $4 billion bidding war for OMX against state-owned Borse Dubai.
OMX owns exchanges in Sweden, Denmark, Finland, Iceland and the Baltic states.
A decline in Nasdaq's stock price has caused a drop in the value of the company's cash-and-share offer for OMX. The deal was worth roughly 204 crowns a share at Friday's close, while Borse Dubai on Friday announced an all-cash bid of 230 crowns per share.
A sale of Nasdaq's 61.3 million LSE shares, which are valued at about 797 million pounds ($1.58 billion) at current prices, may be a precursor to the exchange raising its bid for
OMX.
Greifeld did not comment on whether Nasdaq would raise its bid, but said he was meeting with Swedish investors and shareholders.
Nasdaq can and will remain flexible in terms of structuring its offer for OMX, Greifeld said.
The Nasdaq-OMX deal has the support of Sweden's business community and OMX shareholders, he said.
RAISING THE BID?
"The announcement that Nasdaq is going to sell stock is a strong indicator that they are going to raise the bid," said David Easthope of financial consultant Celent.
Borse Dubai's offer represents a 13 percent premium to Nasdaq's bid of 0.502 shares plus 94.3 crowns in cash for each OMX share.
Failure to complete another takeover could concern Nasdaq's investors, whose shares have lost about one-tenth of their value since the failed LSE run.
"In the absence of either an OMX or a London Stock Exchange acquisition, international opportunities will be limited -- enough potentially to turn Nasdaq into the target," FBR analyst Matt Snowling said.
Shares of Nasdaq rose 1.3 percent to $32.15 on Monday. LSE was up 2.4 percent at 1,300 pence.
UBS (UBSN.VX) and JPMorgan (JPM.N) are advising Nasdaq on the potential sale of the LSE shares.
The exchange said on Monday that it wanted to sell the stake, but could not guarantee that it would. Nasdaq bought the shares over time at an average of about 11 pounds apiece and could amass a paper profit of $245.2 million at current levels.
Nasdaq estimated the LSE stake sale would boost its stand-alone 2008 earnings per share by 30 cents to 35 cents.
That would lift the company's 2008 earnings per share to between $2 and $2.05, according to Reuters Estimates, and would lower its price-to-earnings multiple to just 15.8 from 18.7, vs. 20 for its peers.
Nasdaq said it would use $1 billion of proceeds from any sale to retire senior debt. It intends to use the remainder to buy back shares. LSE officials declined to comment.
Since Nasdaq's takeover for the LSE failed earlier this year, the LSE has agreed to acquire Milan exchange Borsa Italiana for 1.6 billion pounds ($3.16 billion), a deal set to dilute Nasdaq's stake to about 22 percent.
(Additional reporting by Jeffrey Goldfarb in London; Jonathan Keehner, Joe Giannone and Lilla Zuill in New York)
($1=.5031 Pound)
