Dhabi is in talks to buy a 20 per cent stake in the London Stock Exchange (LSE) held by indebted neighbour Dubai.
The LSE stake sale would be part of an Abu Dhabi buyout of exchange operator Borse Dubai and would follow the latter’s sale of about half of its shares in Nasdaq OMX last week.
Borse Dubai owns controlling stakes in local exchanges Dubai Financial Market and Nasdaq Dubai, plus 20 per cent of the LSE and a remaining 17 per cent stake in Nasdaq OMX.
In March, Borse Dubai chairman Essa Kazim said talks had been held between the Dubai and Abu Dhabi governments over a merger of the DFM and Abu Dhabi Securities Exchange.
Turnover on markets in the United Arab Emirates has plunged since the financial crisis and is poised to slump to a six-year low in 2010, prompting calls for the local bourses to merge.
Abu Dhabi is seen as the driver of a potential merger, with Dubai’s debts estimated at $115bn (£74bn), mainly from state-linked firms.
Borse Dubai paid about $4bn for the stake in Nasdaq OMX and 20 per cent of the LSE, as part of a complicated 2007 deal that saw Nasdaq merge with Sweden’s OMX group.
The deal was completed before the 2008 credit crunch struck and the value of Borse Dubai’s holdings have since slumped. It paid £14.14 a share for its LSE stake, while these shares ended Friday at £8.23.
Last Thursday, Nasdaq OMX bought 22.8m of its shares from Borse Dubai for $497m, pricing the deal at $21.82 per share.
Borse Dubai also agreed to sell a further 8m Nasdaq shares to Investor AB, the holding company for Sweden’s Wallenberg family for an undisclosed fee.