The City is preparing itself for several weeks of posturing by the LSE and Nasdaq as the US exchange tries to persuade the London bourse’s shareholders of the benefits of its £2.7bn “final” offer. The LSE yesterday said the bid so undervalued the company its board was not even willing to meet for further discussions.
The announcement sparked tumultuous trading in LSE shares, which closed 6 per cent higher at 1,291p, well above the 1,243p per share offer price. Nearly 50m shares switched hands. The price is the minimum Nasdaq has to pay until next May under UK takeover code rules because that is the average price at which it bought its initial 25.3 per cent stake.
Nasdaq yesterday increased that to 28.75 per cent, buying the stake of Scottish Widows, one of the LSE’s few remaining long-term investors.
Under the code, Nasdaq cannot raise its offer unless either its board recommends a bid or a competing bidder emerges. If it fails to acquire the company, it cannot bid for another 12 months. LSE’s response suggests it wants to set a value for its shares well above what Nasdaq would be willing to pay, thus keeping its independence.