NASDAQ announces offer for remaining shares of LSE

20 December 2006

Nasdaq reacted to the LSE defence document stating that LSE’s current share price is not supported by the company’s standalone prospects and is only sustainable because of NASDAQ’s Final Cash Offers. Also, “the LSE Defence Circular completely fails to address the concerns of users and the implications of the increased level of competition that will be introduced with the regulatory changes which will occur in 2007”, the Nasdaq statement says.

“LSE has failed to adequately share the benefits of its growth with its customer base. This is illustrated by the modest cost reductions evidenced in the Circular which include reductions in charges for post trade services by entities which are not owned by LSE”

“The emergence of these new competitive threats will force LSE to focus on the imbalance between shareholder and user interests. This impact is not reflected in the current or historical financials upon which LSE’s value case is based.”

Commenting on the Circular, NASDAQ President and CEO Robert Greifeld said “The Board of LSE is ignoring the elephant in the room at its peril. Its recent growth in revenues has taken place without a proper sharing of benefits with users. Regulatory changes, increased consolidation and customer group competition are likely to bring significant downward pressure on LSE’s revenue model going forward. There is nothing in the Circular which causes us to change our view on value.”

A decision by LSE shareholders is expected by 11 January 2007.

Nasdaq statement

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