FTSE in-depth: Nasdaq to move for share of LSE

By GEOFF FOSTER FOR MAILONLINE
Updated: 03:54 EDT, 25 May 2011

Could it be third time lucky for Nasdaq boss Bob Greifeld?

Foster: The Footsie, 22.52 points better at 5,858.41, regained some composure.

He had two takeover bids for the London Stock Exchange repelled in 2007 when former boss Dame Clara Furse rejected his overtures, and the US technology exchange ultimately fulfilled its desire for a European presence by acquiring OMX, the Nordic exchange group.

Rumours are now rife that Greifeld is gearing up to have another pop after recently dropping out of the race for the New York Stock Exchange.

Shares of the LSE jumped 19p to 907.75p amid growing speculation that Greifeld has approached Borse Dubai for its 20.6% stake in the LSE. He is said to be prepared to pay up to £16 a share to get the shareholding prior to launching a full-scale cash offer for the LSE worth north of £4bn.

The Dubai exchange is believed to be a ready seller but the Qataris, which own 15% of LSE's equity, could prove to be a harder nut to crack.

There have been vague suggestions of late that the Qataris are looking to increase their shareholding to 29.9% before mounting a bid. Either way it does suggest the LSE's days of independence are numbered, at last.

Its hopes of forging a transatlantic alliance with Canada's TMX suffered a big blow when a consortium of Canadian banks and pension funds tabled a £2.3bn cash and stock offer for TMX, trumping LSE's politically unpopular £1.9bn offer.

LSE boss Xavier Rolet has no plans to end up in a TMX bidding war but if the Canadian deal does not come off he desperately needs to do something or face the consequences.

A wave of consolidation has demoted the LSE to a second tier player among global stock exchanges. Banks gave ground after credit rating agency Moody's announced that it is placing most of UK banks on review for possible downgrade.

This is not the result of a deterioration of the banks' financial positions, rather part of a wider review of the impact of the removal of implied state support for the banks.

Part nationalised Royal Bank of Scotland eased 0.44p to 40.43p and Lloyds Banking Group 1.13p to 49.74p, while Barclays dipped 2.65p to 265.55p.

Broker Evolution says the short-term outlook at Lloyds is plagued with major uncertainties such as the size of the upcoming kitchen-sinking and the disposal of 600 or more branches.

However, Lloyds is the only bank in its coverage where investors might have a realistic chance of doubling their money, on a 18-24 months view. Its target price is 106p.

The Footsie, 22.52 points better at 5,858.41, regained some composure after Monday's wobble on renewed eurozone debt worries. Miners led the recovery after Goldman Sachs advised clients to be long of commodities, only a week or so after telling them to run for the exit.

Apparently, the IS broker expects Chinese demand for copper to increase in the coming months.

Fresnillo advanced 54p to 1356.5p, Antofagasta 36p to 1196.5p and Kazakhmys 28p to 1234.5p.

Cairn Energy gushed 16.6p to 435.6p after outlining plans for drilling in Greenland this year. It will drill up to four wells at an estimated cost of £373m.

BG Group rose 33p to 1376.75p amid continuing gossip that Royal Dutch Shell (24p higher at 2118.75p) will use the £5bn cash proceeds from the imminent sale of its remaining 24% stake in Woodside Petroleum to BHP Billiton (41p up at 2344.75p), to help fund a mega bid for BG Group.

Punters again dived into Northumbrian Water as bid rumours resurfaced. The shares added 3p to 356.25p amid revived gossip that the Ontario Teachers Pension Fund, which owns 27% of the equity, has sounded out leading banks about taking the group private.

Northumbrian provides water and sewage services to 4m-plus customers in the northeast and southeast of the country.

Crop enhancement company Plant Impact jumped 7p to 32.5p after raising £2.05m via the issue of 4.6m shares at 45p per share. Arysta Lifescience has taken a 9.1% stake and PI has entered into two commercial agreements with the world's largest privately held crop protection company.

Further contract news helped Eruma climb 2p or 35% to 7.75p. It has secured a £1.1m deal to install its SecurTM range of security blinds at a London-based foreign government embassy.

Beacon Hill Resources, which owns and operates the only producing coal mine in Mozambique, added 1.25p at 11.75p in belated response to a bullish note from broker Collins Stewart and target price of 38p.

Stratex International firmed 0.22p to 7.25p following its formation of a joint venture with Antofagasta to undertake exploration for copper and copper-gold deposits in Turkey.