A Quiet Victory

NASDAQ is selling its holdings in the London Stock Exchange (LSE), removing the threat tNew York’s contagion will spread to London’s financial markets.

London’s financial service sector is the backbone of the Brit economy, and NASDAQ has been playing dirty pool to take control of the LSE, one of its most important engines, by blocking the LSE’s acquisition of Italy’s Borsa Italiana. They failed:

09 August 2007

Nearly 100 per cent of voting shareholders backed the London Stock Exchange’s bid for Borsa Italiana yesterday, paving the way for completion in October…

The move sparked a surge in the LSE’s shares which leapt 47p to £14.40, a new all time high close – nearly £2 higher than the Nasdaq’s unsuccessful £12.43-a-share hostile bid. Nasdaq had backed the deal after it became clear that the LSE had the support of other major shareholders.

The US exchange received a presentation from LSE management and said it had concluded that it was “an appropriate transaction”. But relations between the two exchanges remain poor, which will not help the Nasdaq if it decides to make a fresh attempt on the London exchange next February when the one-year bid prohibition comes to an end.

Now NASDAQ is folding its tents:

20 August 2007

Nasdaq on Monday announced that it is seeking to divest its 31 per cent stake in the London Stock Exchange because it believes that the current stock price does not adequately reflect its value…

Sale of the stake comes as Nasdaq faces dilution of its share in the LSE down to 22 per cent following that exchange’s acquisition of Borsa Italiana.

This is a big win for the Brit financial services sector, which is determined to avoid New York’s of loss of IPO business caused by SOX and the depredations of the US tort bar.

Neither of these are the fault of NASDAQ, which is in the unfortunate position of being seen as a carrier of contagion.

But the outcome is excellent for Brit and Italian companies and investors.

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4 Responses to A Quiet Victory

  1. Jay says:

    Maybe the US needs an exchange based in another country. Hmmm . . . like maybe the UK?

  2. gandalf says:

    Jay

    Fine, if you can help me design the SOX & tort DMZ…

  3. Jay says:

    No laws, minor regulation. We base it on the rules for the “off shore banking” countries that drug dealers and crooked politicians (that’s redundant, right?) use.

  4. gandalf says:

    Jay

    Yup, just like Switzerland. But warmer would be good.

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