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Stockholm: Borse Dubai's $4 billion takeover bid for OMX suffered another blow on Friday as the Swedish government said it would now have to assess whether it was able to sell its 6.6 per cent stake in OMX to a company that has broken Swedish law.
On Thursday, Sweden's financial regulator and its government acted to intensify pressure on the Middle Eastern company.
The Financial Supervisory Authority ruled that Borse Dubai had broken the law when it bought a large stake in the Nordic market operator on August 9 by not disclosing that this move was a takeover bid.
Responding to the FSA's decision, Mats Odell, minister for financial markets, said: "We will make an overall assessment of all the relevant issues before we make our decision about to whom we sell our stake." He added if the government were to conclude it could not sell its stake to Borse Dubai, it would "sell it to someone else".
Timeline
The government's decision is expected to be made by the end of September.
Borse Dubai responded to the ruling by saying it would proceed with its proposed takeover. It must now file a formal takeover bid for OMX with the FSA by September 6.
The filing will clear the way for the FSA to begin a probe into whether Borse Dubai is a fit and proper owner of OMX. Sweden treats OMX as a strategic industry and its owner must be approved by the regulator.
Gent Jansson, acting director general of the FSA, said yesterday's decision would form part of its investigation into Borse Dubai's fitness and properness. "It will be taken into account," he said.
"This is not a good start for [Borse Dubai] in Sweden," said Bjorn Wendleby, senior mergers and acquisitions lawyer in Sweden with no affiliations to either side. "To be an owner of the stock exchange you should have absolutely nothing on your record."
The FSA decided not to act against Borse Dubai, saying its decision formally to announce a takeover on August 17 meant it was now in compliance with the law.
Persistent regulatory questions about Borse Dubai's all-cash bid strengthen Nasdaq's hand; the US company that agreed a $3.7 billion cash and share takeover offer with OMX's management.
The US company faces pressure to raise its bid to match Borse Dubai's, but is understood to be biding its time to see how the regulatory situation develops.
Nasdaq declined to comment.
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