Shares in the London Stock Exchange closed at a record high of £13.45, up 29p or 2.2 per cent, after a day of frenetic trading in which 9m shares – more than three times the average daily turnover – changed hands.
The trading was fuelled by speculation that the LSE has agreed to discuss with Nasdaq, which has made a hostile bid for it at £12.43 a share, better terms for the deal. The shares peaked at £13.50 before falling back.
So far, the LSE has said the price set by Nasdaq is so far below fair value that it is not even worth discussing. For its part, Nasdaq has said it will not pay any more.
But later it became clear no talks had occurred or were planned.
But Nasdaq’s announcement late on Thursday regarding the timetable for its bid renewed speculation among some investors that it was prepared to go higher if only the LSE would discuss the subject.
Under the UK Takeover Code, Nasdaq has until January 27 to change the terms of its offer because it is the 46th day after its formal launch. However, it is understood that the Takeover Panel, which seeks to safeguard the interests of target companies as well as of their shareholders, has occasionally granted an exemption to the rule barring changes past the 46th day when extensions are requested by the target company.
However, the Panel is understood to regard Nasdaq’s statement on Thursday as a line in the sand which cannot be crossed, even with the consent of the LSE. The fact that Nasdaq gave a nine-day extension before closing the window on possible revisions to its bid, rather than close it immediately, suggests it is prepared to pay more for the LSE despite its protestations.
Advisers to Nasdaq believe LSE shares will fall sharply after January 27 if no deal is agreed. In that event, shareholders may choose to tender their shares to Nasdaq rather than suffer losses.
However, the LSE said it believed its shares were underpinned by its strong trading, not the Nasdaq bid. It has also announced plans for a £250m share buy-back to begin as soon as the Nasdaq bid expires on February 10, in effect underpinning its own share price.