LSE takes on Nasdaq
The London Stock Exchange moved to fend off US rival Nasdaq’s hostile bid today by unveiling plans to return an extra £250m (€380.8m) to shareholders.
The share buy back boosts the £50m (€76.2m) already pledged for the 2007 financial year, bringing the total over the last two and a half years to £974m (€1.5bn), 35% of the LSE’s current market capitalisation.
The LSE’s announcement comes ahead of the final offers deadline for Nasdaq’s £2.7bn (€4.1bn) bid on January 26, which was extended when less than 1% of LSE shareholders accepted the offer earlier this month.
The share buy back also follows yesterday’s news that the LSE is to cut the fees it charges to trade on its market.
The exchange said it would cut tariffs by an average of 10%, aimed at encouraging more orders through its electronic system SETS, as off-exchange trading, which accounts for half of all trading in LSE shares, earns the exchange no revenue.
The LSE, which is Europe’s biggest stock market, upped its forecast for SETS trading after the tariff price reduction, predicting an increase of 180% to at least 48,000 trades per day for the 2008 financial year.
Clara Furse, chief executive of the LSE, said: “Today’s revised SETS forecast, together with the recently announced tariff changes, support a compelling value creation story for the exchange group.”
The LSE remains under pressure from Nasdaq’s threats to sell its 28.8% stake if the bid fails.
If the Nasdaq carried through with its threat, it would “clearly have a massive downward effect on the share price”, according to Richard Hunter, head of UK equities at Hargreaves Lansdown Stockbrokers.
