Updated from 2:43 p.m. ESTThe Nasdaq Stock Market ( NDAQ) is sticking with its 'take or leave it' offer for the London Stock Exchange. The Nasdaq is extending the deadline for London shareholders to accept its $5.3 billion bid to Feb. 10. But the Nasdaq is sticking firm and refusing to sweeten the pot by increasing its 1,243 pence per share offer. The Nasdaq, early Friday, shut the door to any possible increase in its bid by saying, "there is now insufficient time to effect any revision to its final offers via constructive dialogue with LSE." In other words, as the LSE said in a press release earlier in the week, it's now "put up, or shut up time'' for London shareholders. So in two weeks time, Wall Street will finally know how the ending to this increasingly bizarre and hostile soap opera, which has dragged on for nearly 10 months. Meanwhile, the Nasdaq's arch-rival, the New York Stock Exchange, which continues to wheel-and-deal and could be nearing some partnership with the Tokyo Stock Exchange. Up until now, many LSE shareholders had been holding out hope that the Nasdaq would show a willingness to better its price, or another suitor would emerge to force the Nasdaq's hand. That may be why the Nasdaq has made so little progress in getting London stockholders to vote its shares in favor of the merger.
The Nasdaq says over the past few weeks, just 14,000 additional shares have been tendered in support of the deal. That's on top of the 1.3 million shares previously voted in favor the deal. With the Nasdaq owning a 29% equity stake in the LSE, it's still needs shareholders controlling about 20% of the London's stock to vote in favor of a deal.. Meanwhile, shares of the LSE continue to trade as if the Nasdaq's final offer isn't really final.On Friday, shares of the LSE traded 4.2% above the offer price at 1,295 pence per share. Nasdaq shares meanwhile fell 10 cents, to $33.97 on Friday. Nasdaq's hostile pursuit of the London exchange is in stark contrast to the friendly nature in the way NYSE Group ( NYX), the parent of the New York Stock Exchange, has sought international acquisitions. The Big Board is nearly complete with its $14 billion deal for Euronext, which owns equities exchanges in Amsterdam, Brussels, Paris and Portugal, and a derivatives exchange in London. NYSE is still waiting on one final regulatory approval from the Dutch Finance Minister, CEO John Thain told CNBC. The deal is expected to close at the end of March or early April. Even though the Euronext deal isn't completed yet, the Big Board is already moving on to other transactions.
Two weeks ago, the exchange took a 5% interest - the largest amount possible by a foreign entity -- in the National Stock Exchange of India for $115 million in cash. Goldman Sachs ( GS) and two private-equity firms, General Atlantic and Softbank Asian Infrastructure Fund, also have bought 5% stakes in the Mumbai-based exchange. NYSE is also eyeing the Tokyo Stock Exchange. The two markets are expected to announce some sort of partnership next week, although an outright merger is unlikely. By contrast, Nasdaq and LSE executives have been acting like children, throwing barbs at each other. Instead, the Nasdaq and the LSE have been using pride as a drive of their positions on the deal, "It's very hard for
Nasdaq to back down at this point without there being question on why they pursued it from the beginning," says Adam Sussman, an analyst at TABB Group. But the game that the two exchanges are playing is dangerous, he cautions. Obviously Nasdaq has had to take on some debt in order to pursue the LSE," which is pinning down its shares, Sussman says. "On the other hand the LSE is continually pushing back on Nasdaq and turning down the bids. In a way they may be biting the hand that feeds them in a sense."
The Nasdaq says that it was not their intention to make the deal hostile. "We tried to make a friendly approach, which was unilaterally announced by the other side, despite our requests for confidentiality," says Richard Constant, a Nasdaq spokesman. "At various stages through the process, in our documents we requested that they meet with us in order to see if we could achieve a recommended deal and even as late as Nov. 20 our chairman called the
LSE chairman to suggest a meeting and in that call he said he would get back to us but that has never happened. Therefore a recommended situation has not been obtainable at this time." The LSE, in a regulatory filing following Nasdaq's offer extension, said it continues to recommend that its shareholders reject the bid. "This very low level of acceptances is in line with the Board's view that Nasdaq's offer substantially undervalues the exchange and fails to reflect its unique strategic position, outstanding financial performance and excellent prospects," the London exchange said.