New bid for OMX in Nasdaq-UAE deal

Borse Dubai and Nasdaq, rivals to take over Nordic market operator OMX, said Thursday they had joined forces to acquire it together in a deal that gives Borse Dubai 19.99 percent of US-based Nasdaq and 28 percent of the London Stock Exchange.

In a complex takeover proposal that ended months of speculation over OMX’s fate, the groups said Borse Dubai of the United Arab Emirates would follow through on its previously announced 230 kronor per share offer for OMX. The August 17 bid valued the group at $3.97 billion.

The US-based Nasdaq stock market would then acquire all of Borse Dubai’s OMX shares.

The UAE exchange would in return acquire 19.99 percent of the shares in Nasdaq and would also get 28 percent of the London Stock Exchange from Nasdaq.

In another development, the state-linked Qatari Investment Authority said Thursday it had bought a 20-percent slice of the LSE, which is Europe’s oldest stock exchange.

Nasdaq, which was the LSE’s biggest shareholder with a 31-percent holding, said last month that it wanted to sell up after a failed hostile takeover attempt for the LSE.

Nasdaq will meanwhile become a strategic shareholder in the Dubai International Financial Exchange (DIFX).

“Taken together, these strategic actions will provide us with a footprint unlike any other exchange, creating a global exchange leader, with operations in key markets around the world,” Nasdaq chief executive Bob Greifeld said in a statement.

“We are pleased that Borse Dubai has decided to become a shareholder in Nasdaq. This better positions New York, as well as the US, to successfully compete with other global financial markets,” he said.

Borse Dubai’s voting rights in Nasdaq will however be limited to five percent.

The chairman of Borse Dubai, Essa Kazim, said: “Our primary objective is to build a world class, growth-oriented exchange out of Dubai and to become the centre for capital markets activities in the emerging markets.”

With Borse Dubai’s 28 percent share of LSE and Qatar’s 20 percent share, the Middle East was propelled into the heart of European financial markets.

After Thursday’s announcement, the OMX share plunged by 13.15 percent investors disappointed there would be no bidding war for OMX.

But the share recovered and was up by almost five percent in mid-afternoon trading following the announcement by the Qatar Investment Authority that it had bought 20 percent of the LSE and that it could be interested in OMX.

It asked OMX shareholders to hold off on a decision about the Nasdaq-Borse Dubai offer pending its evaluation of the situation.

OMX operates the stock markets of Copenhagen, Stockholm, Helsinki, Reykjavik, Riga, Tallinn and Vilnius.

Nasdaq announced a $3.7-billion bid for OMX in May, but Borse Dubai countered in August with an offer worth $4.1 billion.

Dubai’s offer of 230 kronor per share remains intact and the two parties have until February 2008 to conclude the deal.

If the conditions are met, Nasdaq will then acquire all of Borse Dubai’s OMX shares and in exchange Nasdaq will give Borse Dubai 60.6 million Nasdaq shares plus 11.4 billion kronor in cash.

Upon conclusion of the accord, Borse Dubai will retain 42.6 million shares in Nasdaq.

The board of OMX said it noted the joint announcement by Nasdaq and Borse Dubai and would assess the implications of the structure for shareholders and update OMX shareholders in due course.

“Our initial response is that the competitiveness for the OMX Nordic Exchange will be secured going forward,” it said in a statement.

The Swedish state, which owns 6.6 percent of OMX, said it was also examining the offer.