State-owned Borse Dubai offered on Thursday to buy at least 25 percent of Nordic bourse owner OMX at 230 crowns a share, topping Nasdaq's per share full take-over bid and fuelling expectations of a battle.
Shares in the Swedish company surged after Borse Dubai, a holding firm that pools Dubai's stakes in the Dubai Financial Market and the Dubai International Financial Exchange, launched a book-building to buy OMX shares.
The price was above the current value of Nasdaq's stock-and-cash offer, which is now worth around 200 crowns per share or $3.7 billion overall, and sent OMX shares nearly 6 percent higher to 230 crowns. In a statement, Nasdaq said it remained fully committed to its friendly bid for 100 percent of OMX and urged OMX shareholders not to take action on what it called a conditional offer from Dubai.
Officials at Borse Dubai declined further comment on the offer, while OMX had no immediate response. Borse Dubai said in a statement that it was not obliged to buy any OMX stock "unless it thereby acquires, in aggregate, an interest in at least 25 percent of OMX AB shares".
The Dubai company, which is headed by former OMX Chief Executive Per Larsson, has not decided whether it will buy 100 percent of OMX if it passes its 25 percent threshold, said an adviser to the group who declined to be identified. "That's their current position," he said. But analysts say they believe Dubai's aim is for a full take-over.
"It looks like they are thinking of putting in a cash bid for OMX of 230 crowns, and this will probably be difficult for Nasdaq to match," said an analyst who declined to be identified.
OMX shares briefly spiked above Dubai's offer price as traders speculated about the possibility of a bidding battle. Trading in OMX, which runs exchanges in Sweden, Denmark, Finland, Iceland and the Baltic states, was feverish, with some 15.2 million shares changing hands by 1250 GMT versus a daily average turnover this year of around 1.3 million shares.
"A very good guess is that some people think Nasdaq will get back with a higher bid," said one equity trader who asked not to be identified. "I think that Dubai will get their 25 percent and then approach 30 (percent) where they have to make a bid. In either case, Nasdaq needs to react."
According to Swedish securities law, a stake of 30 percent triggers a mandatory bid. OMX has become a target as cross-border trading, changing regulation and competition from nimble alternative markets have pushed traditional exchanges into looking at ways to bulk up and cut costs.
The New York Stock Exchange recently bought Euronext, the London Stock Exchange has bid for Borsa Italiana and Nasdaq itself was thwarted in an attempt to take over the LSE. OMX would give Nasdaq access to stock and options markets in Europe as well as OMX's successful exchange technology business. Dubai also has much to gain.
"It's about the future development of their two exchanges," said Zahed Chowdhury, head of Middle East research at Deutsche Bank in Dubai. "It's about sharing OMX's knowledge and experience to apply to Dubai."