LSE shares fall as Nasdaq backs away

SHARES in the London Stock Exchange saw widespread selloffs yesterday after the head of its US rival Nasdaq distanced it from talk of bidding for the UK exchange.

LSE shares closed down 4.1 per cent as investors that had seen it as a likely target for a takeover following the collapse of its own plans to merge with Canada’s TMX Group sold out.

Nasdaq’s chief executive Bob Greifeld used the exchange group’s second quarter results announcement to dampen investors’ hopes of a takeover, as such a deal would be costly and hard to gain value from.

“Those type of external opportunities are that much more difficult to show incremental value above and beyond some capital return to shareholders, or investments in internal growth opportunities,” Greifeld said.

Nasdaq had been seen as a likely hostile bidder for the LSE, as national stock exchanges worldwide come under pressure to add market share and cross-border reach.

But UBS analyst Arnaud Giblat said hostile bids for stock exchanges had been successful only when the bidder offered at least a 25 per cent premium to its target’s share price, and such a price would be too high for Nasdaq to offer for the LSE. “In Nasdaq’s situation it would not be enough to justify it to its shareholders,” he said.

Nasdaq said its net income had risen 3.7 per cent to $112m (£68.5m) in its second quarter as listings rose and it gained US market share. In May its hostile bid for NYSE Euronext but was blocked by US regulators.