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Nasdaq is battling to save its agreed bid for Nordic exchanges operator OMX, using every tool at its disposal.
For Bob Greifeld, its chief executive, the stakes are high. Nasdaq's bungled hostile bid for the London Stock Exchange has left it without a merger partner in a rapidly consolidating industry. To lose two potential partners, to paraphrase a cliche, could make Greifeld appear guilty of the sort of carelessness that demands a change at the helm.
Greifeld's strategy has been two-pronged. First, he has made the rounds of shareholders and politicians, cementing the message that Nasdaq is a long term and proper custodian of local capital markets.
The question bubbling around Nasdaq's agreed deal is whether it believes that Borse Dubai will fail the Swedish "fit and proper" test for exchange ownership. And even if it does, will Nasdaq still be compelled to meet the expectations of shareholders and put a more generous bid on the table?
Nasdaq has drawn attention over the past week to the ways in which Borse Dubai bought 4.9 per cent of OMX shares and options on a further 23.5 per cent of shares.
Sweden's Financial Supervisory Authority is understood to have discovered evidence of possible insider dealing in OMX shares during its own probe into Borse Dubai and passed it to the National Economic Crimes Bureau (EBM) to investigate.
In spite of the questions raised about Borse Dubai's conduct, there is fairly wide agreement that the "fit and proper" standard that it must meet is a weak one and that Nasdaq would be foolish to rely on regulators to quash its competitor's bid.
Frederik Gutenbrant, analyst at C A Cheuvreux Nordic, notes that European sentiment could run against Nasdaq. "Dubai could go to the EU and say 'Look at Sweden. They are being protectionist'," he says. "I would be surprised if they are not seen as a fit and proper owner." He adds that the majority of domestic shareholders are indifferent to all considerations except price.
Support
Nevertheless, Nasdaq has strong support from three significant camps; OMX management, the Swedish government and regulators in other markets where OMX operates.
Meanwhile, some analysts believe that the decisive factor in Nasdaq's favour is the fact that OMX's management so clearly wants the deal to go through.
Nasdaq's determination to make it work is equally demonstrated by its decision to sell its 31 per cent stake in the London Stock Exchange, possibly to raise a war chest.
In a research note, analyst Joe Gawronski of Rosenblatt Securities notes that hostile deals, particularly for exchanges, are notoriously difficult to pull off. So far, public remarks of OMX officials are typical of the "Just Say No" approach that worked so well for the LSE.
Advisers to Nasdaq refuse to be drawn on whether it will improve its offer and if so, how. However, with Nasdaq's offer at 202 Swedish crowns a share and Borse Dubai offering 230 crowns, OMX's management faces a challenge to defend its preferred offer over that of the hostile rival.
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