Nasdaq, the US hi-tech stock market, has ruled out bidding for the London Stock Exchange which yesterday abandoned its unpopular merger with the City's German rival.
Sources close to Nasdaq, which had been cited as a potential "white knight" to rescue London from the clutches of OM of Sweden, said yesterday that the US exchange would press for a "pan-European transatlantic partnership". It may, however, be prepared to back a bid by a wider range of European exchanges for London.
Confusion about the future of the 200-year-old London exchange mounted last night when Don Cruickshank, the chairman, said that he would talk to anyone about a potential bid. Mr Cruickshank insisted he would "see off" the £808m offer by OM and carve an alternative route to the creation of a pan-European stock exchange in which London would play a leading role.
He said that to put up a credible defence the London exchange needed to withdraw its merger plan with the Deutsche Börse in Frankfurt - which might yet mount its own bid for the London exchange.
"London is going to take the initiative," Mr Cruickshank said, indicating that he would resume talks with the Germans if OM's bid was defeated.
Failure to cement the German merger continues to deny Mr Cruickshank and his fellow directors stock options linked to the deal. The exchange's shares yesterday closed just below £30, almost double the level at which they started traded a month ago.
The chairman of OM, the owner of the Stockholm exchange which derailed the plan by bidding for London, stands to increase his bonus by £500,000 a year if the audacious ploy is successful.
According to the OM offer document posted to shareholders in the London exchange yesterday, Olof Stenhammar, the chairman, has a profit-related deal under which he receives 1% of the group's income. This would grow by £50m if OM took over the London exchange.
The decision by the London exchange to end its merger with the Deutsche Börse clears the way for the Frankfurt institution to launch its own bid for London, a move which was not ruled out in some City circles last night. Other potential bidders were cited as Euronext, the exchange made up of the Paris, Amsterdam and Brussels bourses, or Liffe, the London International Financial Futures Exchange, which last night ruled out such a move.
The Deutsche Börse was understood to be disappointed by London's decision to pull out. Its chief executive, Werner Seifert, said he would "examine alternative action".
Smaller stockbrokers greeted the London exchange's decision with relief. Brian Winterflood, chairman of Winterflood Securities which has staged a vocal anti-merger campaign, said the London exchange now had its work cut out to "rebuild a lot of bridges".
The London exchange is expected to use tomorrow's annual general meeting to set out its new strategic course.
Changing tune
"The iX proposals are driven not by politics or patriotism but by hard-headed business logic ... there will be more choice for investors and more investors for companies"
Don Cruickshank, Sept 4
"A bog-standard, medium-sized hostile takeover bid"
Don Cruickshank on the OM bid, Sept 2
"I am really quite confident that the vote will go through, which means the merger will be completed by November ..."
Don Cruickshank, Aug 11
"It is good news that the fragmentation and bickering about who is going to be champion of Europe is going away"
Investment banker, May 4
