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March 10: The London Stock Exchange has rejected a proposed 950p a share cash bid from the Nasdaq stock exchange. The LSE said the offer “substantially undervalues the company”. However, this looks like the first bid in an auction that is almost certain to include the New York Stock Exchange. For all the industrial and economic merits of creating a trans-Atlantic exchange, the project raises important regulatory problems. Chief among them is how to reconcile the US’s stringent corporate governance rules with London’s more relaxed regime. Much will depend on the structure Nasdaq proposes but the looser the structure, the smaller the economic benefits of the combination. The LSE’s announcement coming after the market had closed but Nasdaq shares are up 6 per cent.

Shares in Rightmove, Britain’s biggest property website, are trading at more than 50 times last year’s operating profits after jumping 20 per cent on their stock market debut this morning. In fact, the multiple is much, much higher if you look at the figures more closely. The 335p at which the stock was priced is equivalent to 49 times last year’s operating profit of £8.7m. But that figure excludes IPO costs and investment in new service lines. Include the investment costs and the operating profit drops to about £7m, in which case 335p represents a multiple of about 67 times operating profits. Punchy stuff – even before you consider that the stock is now trading at 390p. At that level, the shares are worth closer to 80 times operating profits.

Lloyds TSB shares are up a touch on a story in this morning’s Guardian market report that UBS has been appointed to advise Spain’s BBVA on a possible bid for the bank. We’re looking into it, of course. Lloyds is regularly the subject of bid rumours – usually they are quite easy to dismiss; this time, I’m not so sure.

BAA shares have recovered after a sharp sell-off yesterday when a rumour went around the market that Ferrovial had decided not to bid for the airports group after all. We don’t believe that rumour, and, judging by today’s rise in the price, nor do many others.

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