Thursday, November 23, 2006
LSE/Nasdaq deal may be done within two months - research report
Nasdaq's bid to buy the London Stock Exchange [LSE] may be a game that is "over" in two months unless LSE gets another suitor, Citigroup reports.
Citigroup made the remarks in a 20 November research report on Nasdaq that was prepared by Donald Fandetti and Michael Kaye. The report ranked Nasdaq stock as "hold" and "high risk."
The report discussed a bid by Nasdaq for the LSE and the prospects that the latter now faced. The report said Nasdaq's offer valued the LSE at USD 5.1bn [or USD 5.6bn, factoring in debt] and that LSE now had "few options."
The LSE could either seek a "higher price" from Nasdaq or get another bidder.
The report said that Citigroup's "summary thoughts" were that Nasdaq's bid came "earlier" than the May 2007 timeframe when analysts expected a full bid, but that Citigroup hadn't ruled out a short-term bid. Citigroup expects Nasdaq won't face "much trouble" acquiring a more-than-50% stake in the LSE and achieving a controlling position. Following from this, LSE would have to find "another suitor" within two months or otherwise the "game" is "over."
The report said that details on deal financing have been "limited" and that Citigroup was assuming Nasdaq must buy USD 3.6bn more of shares.
The report said that an "offering document" with more financing details may be available the week of 20 November. This would then give Nasdaq between 21 and 60 days in which to acquire LSE shares from stockholders willing to tender stock. The report said that while Nasdaq must only get to a 50% position to control LSE and make board changes, Nasdaq hoped to get 90% of shares. If Nasdaq doesn't get over 50% of shares, it must wait one year before resuming bidding.
The LSE during the 21 to 60-day period could either ask for a higher price or lure another bidder, but Citigroup said potential suitors were few, and thus the LSE seeking more money was "increasingly likely."
The report said it's unlikely that Nasdaq would increase its bid.
The report said that Nasdaq has a USD 5.68bn market cap.
Source Analyst report
Citigroup made the remarks in a 20 November research report on Nasdaq that was prepared by Donald Fandetti and Michael Kaye. The report ranked Nasdaq stock as "hold" and "high risk."
The report discussed a bid by Nasdaq for the LSE and the prospects that the latter now faced. The report said Nasdaq's offer valued the LSE at USD 5.1bn [or USD 5.6bn, factoring in debt] and that LSE now had "few options."
The LSE could either seek a "higher price" from Nasdaq or get another bidder.
The report said that Citigroup's "summary thoughts" were that Nasdaq's bid came "earlier" than the May 2007 timeframe when analysts expected a full bid, but that Citigroup hadn't ruled out a short-term bid. Citigroup expects Nasdaq won't face "much trouble" acquiring a more-than-50% stake in the LSE and achieving a controlling position. Following from this, LSE would have to find "another suitor" within two months or otherwise the "game" is "over."
The report said that details on deal financing have been "limited" and that Citigroup was assuming Nasdaq must buy USD 3.6bn more of shares.
The report said that an "offering document" with more financing details may be available the week of 20 November. This would then give Nasdaq between 21 and 60 days in which to acquire LSE shares from stockholders willing to tender stock. The report said that while Nasdaq must only get to a 50% position to control LSE and make board changes, Nasdaq hoped to get 90% of shares. If Nasdaq doesn't get over 50% of shares, it must wait one year before resuming bidding.
The LSE during the 21 to 60-day period could either ask for a higher price or lure another bidder, but Citigroup said potential suitors were few, and thus the LSE seeking more money was "increasingly likely."
The report said it's unlikely that Nasdaq would increase its bid.
The report said that Nasdaq has a USD 5.68bn market cap.
Source Analyst report
