The London Stock Exchange said Friday that it has received and rejected a 2.4 billion pound ($4.2 billion) takeover approach from the Nasdaq Stock Market Inc.

The LSE, which recently batted away a much lower bid from Australia's Macquarie Bank Ltd., said that the Nasdaq proposal of a 950 pence ($16.50) per share cash offer also undervalued the exchange.

"The Board of London Stock Exchange firmly believes that the proposal, which represents only a 8 per cent premium to the current market price, substantially undervalues the company, its unique position and the very significant synergies that would be achievable from the combination of London Stock Exchange with any major exchange group," the LSE said in a statement.

LSE shares were at 880 pence ($15.29) Friday, up 1.9 percent.

The Nasdaq had no immediate comment. "We've seen the announcement and we'll make our announcement in due course," said spokeswoman Bethany Sherman in New York.

The Nasdaq offer is substantially above the 580 pence ($10.08) per share offered by Macquarie, Australia's largest investment bank. Macquarie gave up its bid last month after revealing it had acceptances for its offer representing just 0.4 percent of the exchange.