NASDAQ is the world's leading electronic stock exchange, currently providing a listing for approximately 3,200 companies with a combined market capitalisation of US$3.6 trillion. NASDAQ (ticker: NDAQ) is listed on its own market and has a market capitalisation of approximately US$5.2 billion1. NASDAQ is a global brand and global market, where issuers from 37 countries list and actively trade. Its issuers span every sector, from energy to communications, manufacturing to biotechnology, retail to financial services. NASDAQ has a strong history of successfully executing strategic transactions, most recently INET.
Details of indicative offer
Cash offer of 950 pence per ordinary share
The indicative cash offer of 950 pence per ordinary share represents:
- a 72% premium over the closing price of 552 pence on 12 August 2005, the business day immediately prior to Macquarie's announcement of its potential interest in a possible formal approach to LSE;
- a 64% premium to the cash offer share price of 580 pence per share offered by Macquarie;
- a 12% premium to the closing price of 845.5 pence on 8 March 2006; and
- a multiple of 29.8x adjusted earnings for the 12 months to 31 December 2005 2.
Whilst this price has been based on the assumption that the LSE capital return announced on 7 March 2006 is not consummated, NASDAQ is conscious that the capital return is attractive to LSE shareholders and would be willing to discuss ways of accommodating the capital return within a revised proposal.
Strong proposal for issuers and market participants
NASDAQ and LSE are both pre-eminent equity markets in their respective countries. NASDAQ believes that bringing together the two organisations would present listed companies, traders and investors with an equity market place, based on dynamic industry leadership, to serve their needs unmatched by any other market place in the world. A transaction presents the potential to create:
- the only global, cross-border equity market platform giving issuers the ability to dual-list simultaneously in London and New York;
- the leading global exchange for listing companies of all sizes and the natural choice for international issuers;
- a powerful equity market place by number of listings with over 6,266 listed companies with a total market capitalisation of approximately £4.2 trillion (US$7.3 trillion); and
- significant efficiencies which would benefit the users of both platforms, and fully execute on the efficiencies that both companies offer their market participants.
Ensures regulatory continuity
NASDAQ's proposal would ensure that LSE continues to be a Regulated Investment Exchange regulated by the FSA. NASDAQ is committed to preserving an FSA regulated Main Market and AIM. Existing clearing and settlement arrangements will remain in place.
Strong governance proposal
NASDAQ contemplates that LSE would have its own Board of Directors with a majority of non-executive independent Directors, consistent with FSA requirements. Accordingly, the LSE Board would include:
- non-executive directors ;
- user representatives;
- independent directors; and
- executive officers.
In addition, LSE would have significant representation on the top company Board, which would meet regularly in London. A combined entity would have a good balance of operations between New York and London.
Deliverable in the near term
Assuming satisfaction on a limited number of preconditions, NASDAQ is confident that it would be in a position to announce a transaction in the near term.
NASDAQ believes that this proposal represents an attractive offer for shareholders and users. NASDAQ will be seeking constructive discussions with the Board of LSE with the view to reaching a recommended offer for shareholders.
A further announcement will be made in due course. There can be no guarantee that any offer will be made.
This announcement does not constitute, or form any part of, any offer for, or solicitation of any offer for, securities.
Enquiries
NASDAQ corporate communications Tel: + 1 (212) 401-8714
Bethany Sherman
Gavin Anderson & Company Tel: + 44 (0)20 7554 1403/1405
Richard Constant
Cautionary Note Regarding Forward-Looking Statements
The matters described herein may contain forward-looking statements that are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. The Nasdaq Stock market, Inc. (“NASDAQ”) cautions that these statements are not guarantees of future performance. Actual results may differ materially from those expressed or implied in the forward-looking statements. Forward-looking statements involve a number of risks, uncertainties or other factors beyond NASDAQ's control. These factors include, but are not limited to, NASDAQ's ability to implement its strategic initiatives, economic, political and market conditions and fluctuations, government and industry regulation, interest rate risk, U.S. and global competition, and other factors detailed in NASDAQ's annual report on Form 10-K, and periodic reports filed with the U.S. Securities and Exchange Commission. In addition, these statements are based on a number of assumptions that are subject to change. NASDAQ undertakes no obligation to update these forward-looking statements.
1Based on 130.5 million fully diluted shares outstanding and a share price of US$39.5 as of 9 March 2006, assuming exercise of in-the-money options and warrants and conversion of the US$445 million outstanding convertible notes
2 Based on LSE's adjusted EPS of 31.9 pence as stated in the Company's trading statement dated 10 January 2006
