The London Stock Exchange (LSE) is poised to seek alliances with overseas markets after seeing off Nasdaq's £2.7bn hostile takeover bid over the weekend.
The exchange, which has fought-off four takeover attempts in two years, will initially look to secure a strategic tie-up with its counterpart in Japan. An outline agreement with the Tokyo Stock Exchange is expected to cover areas such as cross-listings, sharing technology and trading systems, and joint marketing.
Shares in the LSE slipped back 16p to 1266p yesterday as the company found itself out of an offer period for one of the few occasions since December 2004.
Analysts said that over the coming months its share price will hinge on how much of a threat will be posed to the London market's monopoly by new entrants. A consortium of banks known as Project Turquoise is developing a trading platform.
In an update yesterday, the LSE bullishly highlighted its growth prospects in the wake of Nasdaq's failed approach. The number of trades made through its electronic order book SETS increased 61% over January 2006's level to 8.7 million, the highest number yet recorded in a single month.
The LSE has been in the bid spotlight since Deutsche Boerse tabled an offer at 530p a share more than two years ago. There has also been interest from Paris-based exchange Euronext and the Australian bank Macquarie.
The London market's shares have mostly traded above the 1300p mark since Nasdaq launched its own offer in November, reflecting the interest of hedge-fund investors, mostly American firms, which gambled on a higher bid.
Nasdaq seems likely to keep its 28.75% stake in the LSE, which it built up prior to the bid process. It is prevented from making an offer for the next 12 months.
"There is still the possibility that Nasdaq could dump its stake into the market," said analyst Johannes Thormann at West LB. "Although this threat has been made by chief executive Bob Greifeld, we do think it is very unlikely because it would at least partly be self-destructive."
Yesterday's update from the LSE showed that £156.6bn was traded through its electronic order book in January, an increase of 33%. The average daily number of trades in January rose 54% on the same month a year earlier to 397,215.
Shares in Nasdaq, meanwhile, fell 5.7%, or $2.10, to $35.10 on Wall Street.
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