LONDON – Nasdaq Stock Market Inc. abruptly dropped its 2.4 billion pound ($4.2 billion) bid for London Stock Exchange PLC without explanation on Thursday, sending shares of the British stock market operator sharply lower.
New York-based Nasdaq said in a statement that it reserved its right to make another bid for the LSE within the next six months if the London exchange's board agreed to an offer or if a rival bidder emerged. The company said it had nothing to add to its brief statement.
The LSE also had no comment. Its shares sank nearly 9 percent.
Nasdaq's decision was the latest in a long line of failed bids for the LSE — Australia's Macquarie Bank Ltd., Germany's Deutsche Bourse AG and Sweden's OM Gruppen have all failed in overtures for Europe's oldest exchange.
A person familiar with Nasdaq's bid who asked not to be named because of the fluidity of the situation said Nasdaq had wanted to proceed with a friendly approach but felt the LSE's share price had become overvalued.
The LSE had said the Nasdaq's proposal of a buyout at 950 pence ($16.52) per share made March 10 "substantially undervalues the company."
The exchange's shares had been trading well above that price recently as traders appeared to anticpate a bidding war, but they slumped 8.7 percent by midday Thursday to 1,022.5 pence ($17.78).
Katrina Preston of Bridgewell Securities said Nasdaq executives "obviously weren't prepared to get involved in a hostile takeover." She said interest will now focus on the NYSE Group Inc., the New York Stock Exchange operator, which has also been considered a potential bidder.
An NYSE spokesman, Rich Adamonis, said the exchange had no comment.
Australia's Macquarie, which was forced to drop its 580 pence ($10.01) per share offer last month after receiving acceptances representing just 0.4 percent of the exchange operator's shares, argued that the LSE's share price had become inflated because of the takeover interest.
The LSE was also in the sights of pan-European exchange Euronext NV and Germany's Deutsche Boerse, which called off a 1.35 billion pound approach in late 2004 after unhappy shareholders forced the resignation of its chief executive. OM Gruppen dropped its hostile takeover attempt in late 2000.
Euronext, which said more than a year ago that it was interested in bidding for the LSE but never made a firm offer, indicated Thursday it was no longer interested in renewing its advances.
Euronext Chief Executive Jean-Francois Theodore had said last month when it reported its earnings that he wanted to hammer out differences preventing a deal of some sort with Deutsche Boerse.
Deutsche Boerse declined to comment on the Nasdaq move.