So, yet another suitor is sent packing by the London Stock Exchange. Predicting what happens now that Nasdaq’s offer has failed is impossible but here are three possibilities:
1. As soon as it feels it has got on top of its acquisition of Euronext, the NYSE bids for the LSE to create a stock and derivative exchange super-power. As we said in today’s paper, its chief executive, John Thain has certainly dropped enough well-timed hints. And our exchanges expert Norma Cohen and I have long thought Clara Furse at the LSE would feel instinctively more receptive to Thain than to Nasdaq’s Bob Greifeld, all terms being equal. However, Thain would have competition issues (probably not too serious) and Nasdaq’s large stake to get past. Nasdaq already holds 28.75 per per cent - or up to 29.16 per cent with the acceptances - but will own more if the LSE proceeds with a share buy-back next week and Nasdaq doesn’t sell, as is likely. Also, Norma thinks Thain may have his work cut out integrating his various technology systems.
2. The LSE continues to thrive and turns from prey to hunter. It could go after other European exchanges, Asian exchanges or even Nasdaq itself. It seems doubtful that its shareholders want anything other than cash on the barrel head. But perhaps such moves might make it even more attractive to the NYSE and would certainly appeal to the economic patriots.
3. Nasdaq’s assessment of the LSE’s prospects is proved right. Trading volumes slow and competition as a result of Mifid begins to bite. LSE shares fall. Investors rue the day they turned down £12.43 a share and turf out Furse. Suitors, including Nasdaq, are welcomed back with open arms.
Most sell-side analysts believe the LSE shares have risen far enough and hold out little hope of a fresh bid. But they have no skin in the game, as they say. Several apparently clever investors do, and bought in at prices above Nasdaq’s offer. They may well be wrong but I know who I prefer to believe.