Nasdaq Stock Market Inc. said Wednesday that it has raised its stake in the London Stock Exchange to 24.1 percent, the fourth increase in a month, stepping up pressure on Europe’s oldest bourse to accept a takeover.
In two separate purchases, Nasdaq said it paid $321 million for 13.8 million additional shares. Nasdaq first purchased a 15 percent stake in the London exchange on April 11, which made it London’s biggest shareholder, and boosted that to 18.9 percent last week.
The U.S.-based electronic market now holds 47.9 million shares of LSE, which might increase pressure on competitors, including NYSE Group Inc.
“Nasdaq continues to gobble up shares as other investors give way,” said David Easthope, analyst at Celent, a financial research and consulting firm. “Nasdaq continues to demonstrate that it is far ahead of the NYSE in the race to expand its influence across the Atlantic, whether wise or unwise.”
Should Nasdaq increase its stake beyond 25 percent it will be able to block an opposing bidder. NYSE has said it is in merger talks with “significant industry participants,” without identifying a target.
Nasdaq Chief Executive Bob Greifeld noted that the latest purchase pushed its holdings “through the important threshold of 20 percent,” a level that means its income statement will now reflect a proportion of the London exchange’s profits.
Under United Kingdom takeover rules Nasdaq cannot make another bid for all of the London exchange for six months from March 30, when it dropped its $4.5 billion takeover bid, unless London recommends a deal or a competing offer is made.
Nasdaq is allowed to purchase as much as 29.9 percent of London’s shares. If it buys more than that, it would force Nasdaq to bid for all of London’s stock.
“Nasdaq’s move today is clever and a takeover by stealth,” said Angela Knight, head of the Association of Private Client Investment Managers and Stockbrokers, whose members hold as much as 12 percent of the London exchange.
“Greifeld is ensuring no one can do anything with LSE without his blessing,” Knight said.
