Nasdaq has formally launched a £2.7bn hostile bid for the London Stock Exchange and is appealing directly to LSE shareholders after its first two takeover offers were rebuffed by the UK market operator.
Nasdaq said in November that it planned to buy the 71% stake of the LSE it doesn't already own for £12.43 per share. But the LSE board rejected Nasdaq's bid on the same day.
The cash offer followed an indicative bid of 950 pence, or £2.4bn, by Nasdaq that was rejected by the London exchange in March.
Despite the second rejection, Nasdaq continued with its takeover plans and has arranged a $5.1 billion debt arrangement it has secured with Bank of America and Dresdner Kleinwort to finance the deal.
The US exchange is now posting its offer document to LSE shareholders and has set 11 January 2007 as the first closing date of a final £12.43 per share cash bid.
Bob Greifeld, Nasdaq chief executive, says the offer represents "fair value for LSE shareholders", taking into account the success of the business and also the new competitive threat which the LSE will face in the future.
If Nasdaq's bid expires without a resolution, the exchange will retain its current 28.75% cent stake in the LSE but will be blocked from making another bid for a year.
The LSE has reiterated its rejection of Nasdaq's takeover offer.
"The board unanimously rejects Nasdaq's offer as it substantially undervalues the exchange and fails to reflect its unique strategic position and the powerful earnings and operational momentum of the business," says the LSE in a statement.
The London exchange says it will be writing to shareholders to explain its reasons for rejecting Nasdaq's bid. In the meantime it is strongly recommending that shareholders take no action in respect of Nasdaq's offer.