Dubai or not Dubai: Nasdaq to sell stake to Mideast bourse, but Congress rumbles
The government-controlled stock exchange in Dubai, the fast-growing Middle East business center, announced Thursday in Stockholm that it would take significant ownership in the Nasdaq stock exchange in New York and the London Stock Exchange.
Dubai will become the first Middle East government to own a large stake in an American stock exchange and be the largest single investor in Nasdaq.
Under the deal, Nasdaq will take over the Nordic bourse operator OMX Group, while Borse Dubai will acquire just under 20 percent of Nasdaq and 28 percent of the LSE.
Borse Dubai will go ahead with its \2.94 billion, or $4.12 billion, cash bid for OMX but will sell all shares to Nasdaq.
OMX, based in Stockholm, also operates in Helsinki, Copenhagen and other countries in Scandinavia and the Baltic states.
[”Taken together, these strategic actions will provide us with a footprint unlike any other exchange, creating a global exchange leader, with operations in key markets around the world,” Bob Greifeld, chief executive of Nasdaq, said in a statement, Reuters reported.]
With a 17 percent share, Horizon Asset Management of Seattle is now Nasdaqs largest investor, according to the exchange.
Reports of a possible deal brought questions Wednesday night from lawmakers in Washington about potential compromises to security in the United States. The concerns were similar to those raised more than a year ago when another Dubai-owned company, DP World, tried to buy a U.S. port operations manager, and in 2005, when a Chinese oil company, Cnooc, tried to buy an American rival, Unocal. Both efforts were abandoned under pressure from Congress.
Dubai is the commercial and financial center of the United Arab Emirates on the Gulf and has been cited as a transit point for money used to finance terrorism.
Senator Charles Schumer, Democrat of New York, who helped lead the opposition to Dubais investment in the U.S. ports, said that the deal, which would make Dubai a major player in New York finance, would “raise serious questions that have to be answered.”
“Should any government own any part of a major U.S. stock exchange?” asked Schumer, who is on the banking and finance committees in the Senate and is the chairman of the joint House and Senate economic committee.
A spokeswoman for Nasdaq did not return phone calls seeking comment, and executives in Dubai could not be reached.
Borse Dubai plans to acquire its stakes in the New York and London exchanges through an elaborate series of steps growing out of its success in outbidding Nasdaq for OMX Group.
In the deal, Borse Dubai will complete the purchase of OMX Group and then hand it over to Nasdaq in exchange for a 19.99 percent share in the New York exchange and Nasdaqs stake in the London Stock Exchange, which is valued at about $1.8 billion.
Nasdaq has been struggling to get a foothold in Europe and watched as a rival, NYSE Group, merged with Euronext to form a global exchange company. Stock markets around the world are combining or buying stakes in each other to meet clients demands to trade shares of companies anywhere, at a faster pace, across different asset classes and for less money. Combinations also help them save costs in an industry where the largest expense is developing the technology to run trading platforms. Qatar buys 20% stake in LSE
The Qatar Investment Authority said Thursday that a wholly owned subsidiary, Qatar Holding, had bought a 20 percent stake in the London Stock Exchange, Reuters reported from Stockholm.
The Qatari group said it had no immediate plans to make an offer for the London exchange.
