Last week, we reported that Borsa Dubai and Nasdaq were trying to come to an agreement concerning their competing bids for Sweden’s OMX, and now it looks like the deal has been reached!
If all goes according to plan, Borse Dubai will end up with pieces of both Nasdaq and the London Stock Exchange (LSE), while Nasdaq will have sole possession of OMX and a strategic partnership with Borse Dubai’s exchange subsidiary, the Dubai International Financial Exchange (DIFX).
Oh – and for a brief period, Borse Dubai gets to hold all of OMX.
To understand the shuffling of shares the two-step deal will entail, you have to understand where things stand today:
Borse Dubai currently owns five percent of OMX and has call options for 19% more, for a total of 24%, with an offer on the table to purchase the whole thing for 230 Swedish kronor ($34.68) per share in cash.
Nasdaq owns 28% of LSE, which it is trying desperately to sell in order to fund a purchase of OMX, with whose management it has already reached an agreement.
In phase one of the new plan, which management of all three exchanges (LSE hasn’t chimed in yet, and really has no say in the matter, Borse Dubai gets to buy OMX at the price it has already offered — but won’t hold it for long.
In phase two, Borse Dubai swaps OMX for a 19.9% stake in Nasdaq and buys Nasdaq’s 28% stake in the LSE for £14.14 ($28.30) per share.
Nasdaq also gets an unspecified piece of DIFX, which will somehow incorporate Nasdaq into its name – perhaps as “Nasdaq Dubai” – and have access to OMX technology.
In the end, you have one merged trans-Atlantic exchange (Nasdaq/OMX) with a deep-pocketed Middle Eastern strategic partner (Borse Dubai), and a tangential — if uncooperative — link to what remains Europe’s largest equities market (LSE).
