LONDON -- Nasdaq Stock Market Inc is abandoning its 797 million pound ($1.58 billion) stake in the London Stock Exchange, five months after its takeover bid failed, so it can focus on buying Nordic exchange operator OMX .
Nasdaq, a U.S. exchange company eager to expand its presence to markets overseas, is locked in a $4 billion bidding war with Borse Dubai for OMX, which owns exchanges in Sweden, Denmark, Finland, Iceland and the Baltic states.
The value of Nasdaq's cash-and-share offer has eroded due to a decline in its stock price, representing roughly 204 crowns for each OMX share at Friday's close. Dubai on Friday announced an all-cash bid of 230 crowns per share.
The possibility of failure to complete another takeover prompted Nasdaq to throw in the towel on its unsolicited, debt-fueled LSE bid, which has weighed on its stock for months.
"In the absence of either an OMX or a London Stock Exchange acquisition, international opportunities will be limited — enough potentially to turn Nasdaq into the target," FBR analyst Matt Snowling said.
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Shares of Nasdaq rose 3.9 percent to $33 in premarket trade from Friday's closing price of $31.75. LSE was up 2.1 percent at 1,296 pence.
UBS and JPMorgan are helping Nasdaq decide what to do with the 61.3 million LSE shares, which are valued at about 797 million pounds at current prices.
Nasdaq said on Monday that it wanted to sell its LSE shares, but could not guarantee that it would.
The New York-based company, which bought its shares of the LSE over time at an average of about 11 pounds apiece, could amass a paper profit of $245.2 million at current levels.
Nasdaq estimated the LSE stake sale would boost its stand-alone 2008 earnings per share by 30 cents to 35 cents.
That would lift Nasdaq's 2008 earnings per share to between $2 and $2.05, according to Reuters Estimates, and would lower its price-to-earnings multiple to just 15.8 from 18.7, vs. 20 for its peers.
Nasdaq said it would use $1 billion of proceeds from any sale to retire senior-term debt, and it intended to use the reminder to buy back shares.
LSE officials declined to comment.
Since Nasdaq's takeover for the LSE failed earlier this year, the LSE has agreed to acquire Milan exchange Borsa Italiana for 1.6 billion pounds ($3.16 billion), a deal set to dilute Nasdaq's stake to about 22 percent.
Borse Dubai's offer for OMX represents a 13 percent premium to Nasdaq's offer of 0.502 shares of Nasdaq shares plus 94.3 crowns in cash for each OMX share.
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