Nasdaq and Borse Dubai have hammered out a deal that will see the US exchange secure control of Sweden's OMX, and in return Dubai will get a stake in its business and buy most of its shareholding in the London Stock Exchange (LSE).
Under the four-way deal, state-owned Borse Dubai will acquire a 19.99% stake in Nasdaq for an implied price of $41.01 per share - a 14% premium to the stock's closing price on Wednesday. However Dubai will only get five per cent voting rights.
Borse Dubai will also purchase 28% of Nasdaq's 31% stake in the LSE at a price of £14.14 per share. Nasdaq will retain the remaining 3.5% stake in the LSE.
The agreement will also see Dubai transfer all the shares it acquires in the OMX from its $4bn bid to Nasdaq.
The US exchange will additionally become "a strategic shareholder and the principal commercial partner" of Dubai International Financial Exchange (DIFX). As part of the investment, DIFX will take on the Nasdaq brand and use OMX technology and marketing resources.
In a statement, Nasdaq president and CEO, Bob Greifeld, says: "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.
"On the closing of the transactions with Borse Dubai, and completion of the proposed combination with OMX, we will have the technological infrastructure and the financial strength to serve our customers and to achieve our global ambitions."
Greifeld says the DIFX investment "is an exciting step forward for Nasdaq in a high growth economic region".
"This investment allows us to leverage our brand and distribute the combined group's suite of products and services through DIFX, one of the most well-developed and established marketplaces in the Middle East and North African region. We look forward to expanding our footprint in these rapidly growing emerging markets," he adds.
Commenting on the transaction, Essa Kazim, chairman of Borse Dubai, says: "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. By entering into this partnership with Nasdaq, we will benefit from Nasdaq's world leading brand, technology and platform. In addition, this combination will establish a gateway to large pools of liquidity."
The agreement follows a two month battle between the US and Dubai exchanges for control Nordic and Baltic market operator OMX. Nasdaq agreed a deal in May to buy OMX, but Borse Dubai came in with a higher bid last month. Borse Dubai also recently built a five per cent stake in OMX, with options to increase the shareholding to 24%.
OMX shares were suspended on Wednesday as news of the deal leaked out. The stock fell over eight per cent before suspension at Sk240.50.
In a statement released in response to the Nasdaq/Dubai deal, the OMX board says it will assess the implications of the structure for shareholders and update shareholders in due course.
"Our initial response is that the competitiveness for the OMX Nordic Exchange will be secured going forward," says Urban Bäckström, chairman of OMX. "In parallel, the possibilities for expansion in the Middle East for OMX exchange technology through Nasdaq's investment in DIFX, will increase."
Following news of Borse Dubai and Nasdaq pact, the Qatar Investment Authority (QIA) has disclosed that it has acquired a 20% shareholding in the UK market operator.
Earlier this week QIA was rumoured to be in the running to buy Nasdaq's LSE stake.
QIA is reported to have paid around £633 million, or £15.85 per share, to American hedge fund Paulson and investor Samuel Heyman, which both held 10% stake in the LSE.
The LSE says it welcomes QIA as a long term investor in the company.
"The QIA has an impressive track record of making substantial long term investments in growth companies, so we are delighted to see that it recognises the Exchange's unique strategic position and excellent prospects," says LSE chief executive Clara Furse in a statement.