”Today is Day 50,” declares a surprisingly cheerful Bob Greifeld, the chief executive of Nasdaq who is now nearly a year into what looks likely to be a marathon effort to buy the London Stock Exchange, and probably knows up to the minute exactly how long his endurance race has lasted.
Indeed, it is Day 50, and counting, of the 60 formal days the UK Takeover Code sets out for a formal bid to last from start to finish.
The LSE’s share price has stayed stubbornly above the £12.43 a share that Nasdaq has offered, suggesting it will have few takers.
Mr Greifeld, fresh off an aircraft, remains upbeat. “We certainly understand the action comes on day 58, 59 and 60,” he says. However, he has clearly thought about what will happen if Nasdaq does not succeed.
Nasdaq will hold on to its stake for at least a further 18 months while the London market begins to absorb the implications of a much more competitive environment in which the customers of exchanges – big banks and brokerages – behave more like competitors.
“First and foremost, we will retain optionality,” he says, while adding that Nasdaq will seek to hedge at least part of its 28.75 per cent stake. In the meantime, Nasdaq will look at other possible deals.
Mr Greifeld forecasts that the next 18 months will usher in the most monumental changes in the LSE’s 300-year history, perhaps even more so than the Big Bang in 1986. It is already a factor that is forcing tariff reductions in the US and the customers behind it there are the same as those pressing for competition in Europe.
Mr Greifeld also roundly defends Nasdaq’s tactics in the bid battle, which have been criticised by investment bankers – including several with no interest in the outcome – as unduly hostile. In particular, its decision to frame its offer
as “full and final”, unless either a competitor emerged or the board agreed to a deal, has been especially unpopular.
“We framed it that way because we were comfortable with the £12.43 offer. We felt the LSE financials would earn into that price,” he says.
“What we’re saying is ‘Here’s £12.43. It’s full and fair today. It’s a monopoly business today. It won’t be a monopoly business tomorrow.”
Greifeld says Nasdaq had not expected the LSE to refuse to talk. “On the day we launched the bid [in December], my chairman came to London for the singular purpose of speaking to [LSE chairman] Chris Gibson-Smith,” he says. “There was never even a call back. We expected to engage in a dialogue.”
For their part, the LSE’s shareholders have been very supportive of its tactics and advisers to the LSE say it has felt under no pressure at all to talk to Nasdaq. If anything, shareholders have strengthened the LSE’s resolve to hold out for more.
Mr Greifeld counters that all the LSE’s long-term shareholders, the sort that do fundamental analysis, have sold their shares and those remaining are unfamiliar with the sector or purely gambling on a higher bid.
Moreover, he will not join with them in seeking to oust management in favour of one prepared to aggressively seek a buyer for the LSE.
Mr Greifeld says he is unmoved by arguments that even if £12.43 is a fair price, and that the LSE is such a unique asset that a big premium should be paid for control. “It’s the math that will guide us,” Mr Greifeld says. “Not soft concepts like uniqueness.”
“This asset is difficult to analyse,” he offers, more gently. In the next 18 months, this will be the most uncertain time.”
At the heart of the standoff between Nasdaq and the LSE and its shareholders is a fundamental view of what each believes the London franchise is worth.
After 18 months has gone by, investors will have a clearer view of the impact of competition. “We are not going to change our opinion until we have facts,” said
Mr Greifeld, “until we have MiFID, until we have Boat [another competitive project] and Turquoise.”