Shares in OMX were suspended on Friday morning amid frenzied speculation that Borse Dubai was gearing up to launch a formal takeover bid.

Borse Dubai - a holding company for the Dubai International Financial Exchange (DIFX) and the Dubai Financial Market (DFM) - is offering SKr230 in cash for each share of OMX. The exchange says it already "controls" 28.4% of the Stockholm-based firm.

A spokesperson for Borse Dubai told reporters that the group hopes to close the OMX deal before the end of the year.

OMX has released a statement saying it will "consider the Borse Dubai offer as compared to the Nasdaq offer and will update shareholders in due course".

Borse Dubai's bid is 6.5% higher than the $3.7bn that Nasdaq has already agreed to pay for OMX. Speculation of a bidding war for OMX has soared since last week when the Dubai exchange disclosed plans to raise its stake in the European exchange to more than 25%.

In its own statement released in response to the Dubai bid, Nasdaq says its "remains fully committed to its recommended offer for OMX".

Nasdaq president and CEO Bob Greifeld, says: "We remain convinced that our offer to merge with OMX is in the best short- and long-term interests of all OMX shareholders."

"We are excited to welcome Magnus Bocker and his team into a combined company that has the best technology, most liquid trading platforms, over 4000 listed companies and a record of successful integration. We believe this compares favorably with the Dubai exchange, with only 51 listed companies dominated by one issuer," says Greifeld. "We remain in close dialogue with the management team and board of directors at OMX and remain committed to structural flexibility and have the financial wherewithal to consider other approaches."

After failed attempts to acquire the London Stock Exchange (LSE) earlier this year, Nasdaq finally found a way of pushing into Europe by agreeing a takeover deal with OMX in May. The US exchange is under pressure to expand operations in order to to compete with Nyse Group, which acquired pan-European exchange Euronext last year.

But rumours that the Dubai group was eyeing OMX surfaced very soon after Nasdaq disclosed its own proposed takeover and were helped by the fact that Per Larsson, former president of OM Group, was CEO of DIFX. A bidding war would pitch Larsson - who was recently named as the new CEO of Borse Dubai - against Bocker, his successor at OMX.

The bid is being probed by Sweden's financial regulator, amid concerns that the Borse engaged in a book-building exercise with hedge funds holding stakes in OMX, but failed to disclose plans to launch a full bid. The middle eastern market operator has been given until Monday to answer a fresh batch of questions filed by the Swedish Financial Supervisory Authority.