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Dubai: In preparation for a counter bid to Borse Dubai's $4 billon offer to acquire OMX, the US stock exchange operator Nasdaq is understood to be seeking the support of key institutional investors.
Borse Dubai said that it had answered all the questions raised by Sweden's financial regulator regarding its purchase of a significant stake in OMX and is waiting for the regulator's response.
According to a report in Financial Times yesterday, Bob Greifeld, Nasdaq's chief executive, said Investor, the holding company of the Wallenberg family, and Nordea Bank, have agreed to accept shares and that other shareholders were thinking of doing the same.
Investor and Nordea hold 10.7 per cent and 5.6 per cent, respectively in OMX. "What they (Nasdaq) are trying to do is to free up cash in preparation for a higher bid. How long can investors be persuaded just on good will factors. If Nasdaq is really in the race they will have to come up with a superior offer," said a source familiar with the situation.
While Swedish government holds 6.6 per cent stake in the Nordic exchanges operator about 50 per cent of the shares are held by institutions while hedge funds own between 20 to 25 per cent.
Analysts said it would be naive to expect institutional support, if the offer does not add up to the Borse Dubai's offer.
"Hedge funds are in the market not for altruism. All M&A situations are pure opportunities for them to maximise their gains. Institutions too will be answerable to their shareholders if they opt for a lower value bid," said a DIFC based investment banker.
Analysts familiar with similar deals said investors including Swedish government which has been planning to disinvest from OMX will be more inclined to a cash dominated offer.
M&A experts said Nasdaq's marketing of the deal to OMX investors on the ground of higher longer term value creation is not likely to stand the test of market forces.
Dubai's all cash offer is 13 per cent higher than the US-based Nasdaq's cash-and-share offer of 202.3 crowns ($28.89) per share.
The Dubai offer also represents a 38.6 per cent premium to (165.9 crowns) per share, the volume weighted average price of OMX shares over the 20 trading days up to and including May 23, 2007, the last full trading day prior to the announcement of Nasdaq's offer for OMX.
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