Nasdaq Abandons Bid for Exchange in Britain

Nasdaq Stock Market Inc. abruptly withdrew its $4.2-billion bid for London Stock Exchange on Thursday, abandoning an attempt to create the first transatlantic stock market.

Nasdaq, the largest U.S. electronic equity market, is the third suitor in 14 months to walk away from the London exchange as Chief Executive Clara Furse, 48, holds out for more money.

LSE’s stock sank 6.8% to 1,043.5 pence ($18.21). Shares of Nasdaq fell $1.74 to $40.11.

“LSE looks a little bit left out in the cold,” said Stuart Fraser, a director at Brewin Dolphin, which manages $28 billion, including about 500,000 London Stock Exchange shares. While the share price is still above Nasdaq’s bid, LSE is no longer “in active play,” he said.

Furse, who has touted the London exchange’s viability as an independent company, on March 10 rejected Nasdaq’s approach. LSE shares surged 34% in the next four days as some analysts said the New York Stock Exchange might join the bidding.

Nasdaq CEO Robert Greifeld’s bid stirred interest among LSE’s largest shareholders, yet failed to open discussions with the exchange’s management.

“Greifeld has been very clever,” said Alasdair Haynes, CEO of London-based ITG Europe, a trading system that competes with LSE for some business. “It’s a smart move to pull the bid and wait. If he’s the only bidder in a couple of months time or something else happens, he can come back.”

LSE said earlier this week that it expected an “excellent” profit for the year ending today as trading surges. Average daily trading on its electronic system rose 29% in the 11 months ended Feb 28. The exchange reported a 25% rise in companies selling shares or listing on its markets.

Nasdaq said it reserved the right to announce a bid in the next six months should LSE agree to recommend its offer, or in the event of a rival bid.