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It's really quite funny how sometimes the West behaves when faced with a non-Western rival that is trying to enter and take over the former's turf. Not in some conquering sense like of the past, that is to say colonial times, but with all the good business intentions of leveraging the advantages inherent in the move by the latter.
In fact, recent mergers and acquisitions the world over have increasingly shown that it benefits both parties, and investors stand to gain the most. Remember that not too long ago it was alleged that racism was the reason hindering Mittal Steel's bid for Arcelor in the steel sector. But it ended amicably, making the resulting entity the world's largest steel conglomerate.
When Borse Dubai, about two weeks ago, finally upped the ante and announced its bid for the takeover of the Nordic exchange OMX with a price that was far superior to the offer made by Nasdaq - all-cash of 230 Swedish kroner, 13 per cent higher than that of the rival offer - all kinds of tactics were used to unnerve the Dubai bidder. The drama is still going on. Sure, every regulator has a right to scrutinise any takeover deal and investigate allegations of insider trading, if any, which in fact here did not exist (as found later).
Borse Dubai was, I think, unnecessarily harangued on flimsy grounds. It perhaps had more to do with Dubai being the first non-Western (non-European, non-US) entity bidding for a European exchange. Perhaps, in retrospect, it was arguably a bit childish to try to accuse the Dubai holding company of not being honest about its real intentions of its first buying a 4.9 per cent stake and then for entering into an options agreement for a further 22.5 per cent.
The Swedish regulator felt that Borse Dubai should have in its press release on August 9 said that these twin moves (the smaller stake and then the larger option) were its public takeover bid. The benefit of doubt should have been given to Borse Dubai - which in fact followed. After all, Borse Dubai, quite naturally, wanted to approach the whole matter a bit gingerly before announcing its real motive. Perhaps you pay for being a bit cautious and less bold.
When it got the support of several hedge funds and institutional investors, it gathered courage and on August 17 it said yes, it was going for the complete takeover, rattling OMX and Nasdaq, the two having decided in May to join hands to form Nasdaq OMX exchange. Then a few days later, Borse Dubai even went a step further saying that it had almost $1.3 billion (that is a total of $5.3 billion) more to spare than what it offered ($4 billion). In a market place, more so for investors (especially the hedge funds), price is a driving force. In the developments since then, Nasdaq has no doubt been cornered to the extent that it is ready to give up its stake in London Stock Exchange to get OMX. It's desperate to stop Borse Dubai.
The funniest development this past week is the Swedish Economic Crimes Bureau saying that it does not plan to open any investigation against Borse Dubai. Instead Sweden's Financial Supervisory Authority said on September 5 that OMX could now face an investigation into what media reports have suggested was its deliberate effort to block Borse Dubai's bid. We have to wait and see what the denouement will be of the drama that's now been unfolding for the past one month.
Perhaps all of what has been happening is only to be expected, but it is nevertheless disappointing. One can only say to the West: grow up and face the reality.
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