Nasdaq, Borse Dubai form world146;s largest exchange network

Dubai8217;s regional financial rival Qatar Investment Authority responds swiftly, buys 20 stake in London Stock Exchange

Nasdaq and Dubai8217;s stock exchange struck a deal today that shakes up ownership of some of the world8217;s top share markets and takes the Nasdaq brand into the Middle East and Asia. As part of the agreement, US-based Nasdaq and state-owned Borse Dubai ended their tussle to buy Nordic markets operator OMX AB. Nasdaq gets to buy OMX, while Borse Dubai takes on Nasdaq8217;s key stake in the London Stock Exchange LSE and buys 20 per cent of Nasdaq itself.

The moves, which highlight the increasing influence of Gulf Arab states in global takeover deals, brought a swift response from Dubai8217;s regional financial rival Qatar. Qatar said it had bought a 20 percent stake in LSE through the Qatar Investment Authority QIA and urged OMX shareholders to take no action on the Dubai/ Nasdaq offer. Sources familiar with the matter later said the QIA was buying OMX shares.

In a further dimension of the agreement, Nasdaq will take a 33 percent stake in the Dubai International Financial Exchange DIFX, to be renamed Nasdaq DIFX. Borse Dubai will use this name in the Middle East, North Africa and South Asia. The pair agreed to a separate joint venture in China.

8220;The combination will create the largest global network of exchanges and exchange customers linked by technology,8221; Nasdaq chief executive Bob Greifeld said. But US Sen Charles Schumer, a member of the Senate Banking Committee, said Nasdaq8217;s plan to swap stakes with Borse Dubai raises 8220;serious questions that need to be answered8221;.

Dubai8217;s 20 per cent stake in Nasdaq would make it the single largest owner of the US exchange. Schumer was among the most vocal critics of a 2006 deal that gave Dubai Ports World control of facilities at six major US ports. The company eventually sold its US port operations to a US firm. Greifeld told analysts during a conference call that he does not anticipate regulatory hurdles to the deal with Borse Dubai because Borse Dubai8217;s voting rights in Nasdaq will be 8220;severely restricted8221;. 8220;It is up to us to prove to regulators how good this deal is for New York and the US,8221; he said.

Borse Dubai has bought a 28 per cent stake in the LSE from Nasdaq for 14.14 pounds a share, leaving Nasdaq with 3.5 per cent of the London market operator. Borse Dubai has agreed to continue with its all-cash offer of 230 Swedish crowns per share for OMX. The offer values OMX at around 4 billion. Borse Dubai will then sell OMX to Nasdaq, which will drop its own 3.7 billion cash-and-stock bid for OMX.