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Sunday, February 11, 2007 3:28:09 PM
Companies & markets
London may link up with NYSE
Tom McGhie, Mail on Sunday
11 February 2007
The London Stock Exchange will consider linking up with its New York counterpart and Euronext after successfully seeing off Nasdaq's hostile £2.7bn bid. New York Stock Exchange chief executive John Thain recently refused to rule out a merger with the LSE.
TRIUMPH: LSE chief executive Clara Furse has overseen rise in share price from 450p to 1344¼p
And while such a deal could take some time to cement, the prospect was enough to persuade powerful US hedge funds, which hold about a 20 per cent stake in the LSE, to reject Nasdaq's 1243p-a-share offer.
The failure of the bid by the New York high-tech market is regarded as a triumph for LSE chief executive Clara Furse, who has seen off a succession of predators, ranging from OM of Sweden to Frankfurt's Deutsche Borse.
Over the past two years, shares in the LSE have soared from 450p to a high of 1344½p last month. On Friday, they closed at 1282p, still well above Nasdaq's final offer. The sharp rise in the value of the LSE vindicates Furse's tough line in rejecting a wave of lower bids.
Nasdaq will formally concede defeat tomorrow after persuading virtually none of the LSE's shareholders to accept its bid.
This could put pressure on chief executive Bob Greifeld, whose aggressive tactics and arrogant approach to the bid is seen as a major contribution to its failure.
His decision to go hostile in November and his assumption the LSE would sit down and talk after such an aggressive approach are now seen as major tactical errors.
Greifeld's remarks that he would consider joining a banking consortium, Project Turquoise, to set up in competition against Furse were seen as rebounding badly on Nasdaq, especially as it would devalue its own 28.8 per cent in the LSE.
From the platform of such a large shareholding, Nasdaq was initially expected to win the battle, but over the months, LSE has successfully argued that its share price reflected its record-breaking performance and the possibility of more lucrative deals ahead.
US hedge funds, led by American investor Samuel Heyman, were inclined to believe the LSE. Some analysts reckon the shares could rise as high as 1500p.
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