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Dubai to Buy Large Stake in Nasdaq
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By JOSEPH B. TREASTER
Published: September 20, 2007
The government-controlled stock exchange in Dubai, the fast-growing Middle East business center, is expected to announce today in Stockholm that it plans to take significant ownership in the Nasdaq stock exchange in New York and the London Stock Exchange, people who have been briefed on the transaction said last night.
If the deal is completed, Dubai would become the first Middle East government to own a large stake in an American stock exchange. It also is expected to become the largest single investor in Nasdaq.
The deal by the Borse Dubai would give Dubai a stake of 20 percent to 30 percent in Nasdaq, the largest electronic stock market in America, and about 30 percent in the London Stock Exchange, according to people who have been briefed.
In exchange, Dubai would hand over to Nasdaq the OMX Group, a stock exchange based in Stockholm that also operates in Helsinki, Copenhagen and several other countries in Scandinavia and the Baltic States.
With a 17 percent share, Horizon Asset Management of Seattle is now Nasdaq’s largest investor, according to the exchange.
Reports of a possible deal brought questions last 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 company that managed port operations around the United States, and in 2005, when the Chinese oil company, Cnooc, tried to buy its 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 Persian Gulf and has been cited as a transit point for money used to finance terrorism.
Senator Charles E. Schumer, Democrat of New York, who helped lead the opposition to Dubai’s investment in the American ports, said last night 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 Mr. 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 the OMX Group for about $4 billion.
In the deal that is expected to be announced today, Borse Dubai will complete the purchase of the OMX Group and then hand it over to Nasdaq in exchange for at least a 19 percent share in the New York exchange and Nasdaq’s stake of about 30 percent 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, the 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.
But Nasdaq’s efforts to expand have been rebuffed. It bought a 30 percent share in the London Stock Exchange, but its hostile bids to take over the entire London operation were rejected.
Then in May, Nasdaq announced that it had reached agreement to buy the OMX Group for $3.7 billion. But in August, Borse Dubai, the parent company of the Dubai International Financial Exchange, which includes the former Dubai Financial Markets, came in with a higher bid.
Dubai to Buy Large Stake in Nasdaq
Article Tools Sponsored By
By JOSEPH B. TREASTER
Published: September 20, 2007
The government-controlled stock exchange in Dubai, the fast-growing Middle East business center, is expected to announce today in Stockholm that it plans to take significant ownership in the Nasdaq stock exchange in New York and the London Stock Exchange, people who have been briefed on the transaction said last night.
If the deal is completed, Dubai would become the first Middle East government to own a large stake in an American stock exchange. It also is expected to become the largest single investor in Nasdaq.
The deal by the Borse Dubai would give Dubai a stake of 20 percent to 30 percent in Nasdaq, the largest electronic stock market in America, and about 30 percent in the London Stock Exchange, according to people who have been briefed.
In exchange, Dubai would hand over to Nasdaq the OMX Group, a stock exchange based in Stockholm that also operates in Helsinki, Copenhagen and several other countries in Scandinavia and the Baltic States.
With a 17 percent share, Horizon Asset Management of Seattle is now Nasdaq’s largest investor, according to the exchange.
Reports of a possible deal brought questions last 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 company that managed port operations around the United States, and in 2005, when the Chinese oil company, Cnooc, tried to buy its 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 Persian Gulf and has been cited as a transit point for money used to finance terrorism.
Senator Charles E. Schumer, Democrat of New York, who helped lead the opposition to Dubai’s investment in the American ports, said last night 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 Mr. 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 the OMX Group for about $4 billion.
In the deal that is expected to be announced today, Borse Dubai will complete the purchase of the OMX Group and then hand it over to Nasdaq in exchange for at least a 19 percent share in the New York exchange and Nasdaq’s stake of about 30 percent 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, the 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.
But Nasdaq’s efforts to expand have been rebuffed. It bought a 30 percent share in the London Stock Exchange, but its hostile bids to take over the entire London operation were rejected.
Then in May, Nasdaq announced that it had reached agreement to buy the OMX Group for $3.7 billion. But in August, Borse Dubai, the parent company of the Dubai International Financial Exchange, which includes the former Dubai Financial Markets, came in with a higher bid.