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    Nasdaq Strikes Deal With Borse Dubai
    By Karl Ritter
    The Associated Press

    Thursday 20 September 2007

    Stockholm, Sweden - The Nasdaq Stock Market is selling a nearly 20 percent stake to Borse Dubai and is taking control of the Nordic exchange operator OMX as part of a sweeping settlement of their battle for control of OMX.

    In a global stock market shakeup, Borse Dubai and a group from Qatar also moved to become the largest stakeholders in the London Stock Exchange.

    But the transactions involving Dubai and Nasdaq could face scrutiny in the United States, where a Dubai-owned company's plan to manage some U.S. ports previously raised an uproar.

    The Nasdaq Stock Market Inc. would take control of Stockholm-based OMX while selling to Borse Dubai a one-fifth stake in itself as well as a 28 percent in the London Stock Exchange. Nasdaq had owned a 31 percent stake in the London exchange.

    Hours later, the Qatar Investment Authority said it had bought 20 percent of the London exchange _ possibly setting the stage for a battle for control of Europe's largest exchange, which has fought off a multitude of bids in the past few years and is now nearly half-owned by Middle Eastern groups.

    Under the terms the two agreed on, Borse Dubai will go ahead with its $4 billion cash bid for OMX, but when that transaction is completed it will sell all shares in the Stockholm-based company to Nasdaq.

    In exchange, Nasdaq will pay Dubai 11.4 billion kronor ($1.72 billion) in cash and give it a 19.99 percent stake in Nasdaq. Dubai will also acquire a 28 percent stake in the London Stock Exchange from Nasdaq, which failed to take over the LSE earlier this year. It wasn't clear what would happen to its remaining 3 percent stake in the London exchange.

    "Taken together, these strategic actions will provide us with a footprint unlike any other exchange, creating a global exchange leader, with operations in key markets around the world," Nasdaq Chief Executive Bob Greifeld said in a statement.

    OMX operates stock and derivatives exchanges in Sweden, Denmark, Iceland, Finland and in the Baltic countries of Estonia, Latvia and Lithuania.

    "By entering into this partnership with Nasdaq, we will benefit from Nasdaq's world-leading brand, technology and platform," Borse Dubai Chairman Essa Kazim said. "In addition, this combination will establish a gateway to large pools of liquidity."

    The LSE said it had no immediate comment on that deal, but welcomed the Qatar stake purchased announced later.

    The Qatar Investment Authority said it intends to be a long-term shareholder in LSE. It ruled out a takeover bid for the time being, but said it reserved the right to change that position if someone else announces an intention to bid.

    LSE shares soared 11.6 percent to 1,621 pence ($32.53) on Thursday. Borse Dubai is paying 1,414 pence ($28.38) per LSE share in its deal with Nasdaq.

    OMX shares gained 8.9 percent to 262 kronor ($39.58). Nasdaq Stock Market shares rose $1.86, or 5.2 percent, to $37.85 in morning trading Thursday.

    Nasdaq had made a $3.7 billion cash-and-share offer for OMX in May, a proposal supported by both boards and key OMX shareholders. Borse Dubai launched its challenge on Aug. 17 with an unsolicited $4 billion cash bid.

    The competing offers led to speculation that Nasdaq would be forced to raise its bid or make some other arrangement with Dubai, involving its stake in the London Stock Exchange.

    Nasdaq had said last month it would sell its 31 percent stake in the LSE to focus on the battle for OMX. It said Thursday it would sell 28 percent to Borse Dubai to pay down about $1 billion in debt and initiate a stock buyback.

    The deal is subject to approval by shareholders and regulators in Europe and the United States. Nasdaq and Borse Dubai said the agreements had unanimous support in both boards and that they planned to "submit voluntarily the transaction for consideration by the U.S. government."

    U.S. Sen. Charles E. Schumer, chairman of the Joint Economic Committee and a senior member of the Senate Banking Committee, expressed doubts about the deal, saying it "will raise serious questions that will need to be answered."

    While Borse Dubai would hold a 19.99 percent stake in Nasdaq, the companies said the agreement would cap Dubai's voting rights at 5 percent _ perhaps to help assuage any concern about a Middle Eastern government owning a sizable chunk of a U.S. exchange.

    Greifeld told reporters in Stockholm he believed the U.S. Securities and Exchange Commission would be "positive" toward the agreement.

    "It's a good transaction for the U.S. capital markets system and it will make sure that Nasdaq is a key player in the global consolidation," he said. "It's our job to communicate that to legislators and regulators and clearly."

    Dubai, a Persian Gulf city-state that is part of the United Arab Emirates, has been an aggressive suitor of businesses and tourists as it seeks to diversify its economy beyond its oil wealth, which has helped fuel its building boom and make it a big business hub.

    The companies also said that at a later time Nasdaq and OMX would be joined in a new company called The Nasdaq OMX Group Inc. They also said Nasdaq will invest in the Dubai International Financial Exchange, DIFX, which is owned by Borse Dubai.

    "This is a pure win situation. It's a win for OMX, its a win for Nasdaq and a win for Dubai," said Per E. Larsson, chief executive of DIFX.