NEW YORK, Dec. 19, 2006 (PRIME NEWSWIRE) -- The Board of The Nasdaq Stock Market, Inc. ("NASDAQ") notes the publication earlier today of a document (the "LSE Defence Circular" or "Circular") by London Stock Exchange Group plc in response to NASDAQ's Final Cash Offers.
The NASDAQ Board believes that its Ordinary Offer of 1,243 pence per share reflects (i) a realistic assessment of standalone value in the context of the new competitive threats which LSE will face; (ii) a premium for control (NASDAQ's Ordinary Offer represents a premium of 54 per cent. to LSE's undisturbed share price on 10 March 2006); and (iii) a fair share of synergies, when account is taken of sharing benefits with users.
LSE's current share price is not supported by the company's standalone prospects and is only sustainable because of NASDAQ's Final Cash Offers.
The LSE Defence Circular completely fails to address the concerns of users and the implications of the increased level of competition that will be introduced with the regulatory changes which will occur in 2007. LSE has failed to adequately share the benefits of its growth with its customer base. This is illustrated by the modest cost reductions evidenced in the Circular which include reductions in charges for post trade services by entities which are not owned by LSE (for example CRESTCo and LCH.Clearnet). The emergence of these new competitive threats will force LSE to focus on the imbalance between shareholder and user interests. This impact is not reflected in the current or historical financials upon which LSE's value case is based.
The Circular relies exclusively on historic and 2006 P/E multiples. The NASDAQ Board disputes the claim made by LSE management on this morning's analyst call that they "don't think that using 2007 (P/E) multiples tells a substantially different story." For example, NASDAQ's 2007 P/E based on IBES consensus forecasts is 23.1x in comparison with a 2006 P/E of 47.0x, reflecting the ongoing transformation of the NASDAQ business.
The NASDAQ Board would also draw LSE Shareholders' attention to the fact that of the 2006 P/E multiples shown in the Circular, Euronext N.V. ("Euronext") is the only European sector multiple in excess of the NASDAQ Ordinary Offer. The NASDAQ Board believes that Euronext is an inappropriate comparable because it is dependent upon the offer from NYSE, where the shareholders of Euronext will be receiving shares amounting to over 75 per cent. of the total consideration on a 2006 earnings multiple of 59.5x, as opposed to straight cash.
Commenting on the Circular, NASDAQ President and CEO Robert Greifeld said, "The Board of LSE is ignoring the elephant in the room at its peril. Its recent growth in revenues has taken place without a proper sharing of benefits with users. Regulatory changes, increased consolidation and customer group competition are likely to bring significant downward pressure on LSE's revenue model going forward. There is nothing in the Circular which causes us to change our view on value."
To accept the Final Offers in respect of LSE Shares held in certificated form (that is, not through CREST), holders should complete, sign and return the relevant Form(s) of Acceptance in accordance with the instructions thereon and the instructions in the Offer Document as soon as possible and, in any event, so as to be received no later than 3.00 p.m. London time on 11 January 2007.
To accept the Final Offers in respect of LSE Shares held in uncertificated form (that is, through CREST), holders should submit a TTE instruction in accordance with the instructions in the Offer Document for settlement as soon as possible and, in any event, by no later than 3.00 p.m. London time on 11 January 2007.
Note: The Final Offers will not be revised except that NAL reserves the right to revise the Final Offers: (i) upon a recommendation of the LSE Board; or (ii) if a firm intention to make a competing offer for LSE is announced, whether or not subject to any preconditions (a "competitive situation").
Save as defined above, capitalised terms used in this announcement have the same meaning as in the Offer Document dated 12 December 2006.
Sources and bases
LSE's forecast adjusted basic earnings per share for the 12 months to 31 December 2006, the associated NASDAQ Ordinary Offer multiple and the Euronext and NYSE trading multiples are sourced from the Circular. NASDAQ's P/E multiples are calculated based on the closing NASDAQ price on 15 December 2006 and IBES consensus forecasts for NASDAQ sourced from Bloomberg.
ENQUIRIES The Nasdaq Stock Market, Inc. Tel: +1 (212) 401 8714 Bethany Sherman +1 (917) 836 1724 Greenhill & Co. International LLP Tel: +44 (0)20 7198 7400 (lead financial adviser to NASDAQ and NAL) Simon Borrows Richard Hoyle Dresdner Kleinwort Securities Limited Tel: +44 (0)20 7623 8000 (broker to NASDAQ and NAL) Angus Kerr Alex Reynolds Gavin Anderson & Company Tel: +44 (0)20 7554 1403 (PR adviser to NASDAQ and NAL) / 1405 Richard Constant
Greenhill & Co. International LLP, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for NASDAQ and NAL and for no-one else in connection with the Final Offers and will not be responsible to anyone other than NASDAQ and NAL for providing the protections afforded to clients of Greenhill & Co. International LLP or for giving advice in relation to the Final Offers.
Dresdner Kleinwort Securities Limited, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for NASDAQ and NAL and for no-one else in connection with the Final Offers and will not be responsible to anyone other than NASDAQ and NAL for providing the protections afforded to clients of Dresdner Kleinwort Securities Limited or for giving advice in relation to the Final Offers.
This announcement does not constitute an offer to sell or an invitation to purchase any securities or the solicitation of an offer to buy any securities, pursuant to the Final Offers or otherwise. The Final Offers are being made solely by the Offer Document and the Forms of Acceptance accompanying the Offer Document, which contain the full terms and conditions of the Final Offers, including details of how the Final Offers may be accepted.
Unless otherwise determined by NAL, the Final Offers are not being, and will not be, made, directly or indirectly, in or into or by the use of the mails of, or by any means or instrumentality (including, without limitation, facsimile transmission, telex, telephone or e-mail) of interstate or foreign commerce of, or by any facilities of a national securities exchange of, Australia or Canada or any jurisdiction where to do so would violate the laws of that jurisdiction and will not be capable of acceptance by any such use, means, instrumentality or facility or from within Australia or Canada or any such jurisdiction. Accordingly copies of this announcement are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in, into or from Australia or Canada or any such jurisdiction, and persons receiving this announcement (including, without limitation, custodians, nominees and trustees) must not mail or otherwise distribute or send it in, into or from such jurisdiction as doing so may invalidate any purported acceptance of the Final Offers. Any person (including, without limitation, any custodian, nominee or trustee) who would, or otherwise intends to, or who may have a contractual or legal obligation to forward this announcement and/or the Offer Document and/or any related document to any jurisdiction outside the United Kingdom and the United States should inform himself of, and observe, any applicable legal or regulatory requirements of that jurisdiction.
The NAL Directors and the NASDAQ Directors accept responsibility for the information contained in this announcement, save that the only responsibility accepted by them in respect of information in this announcement relating to LSE, which has been compiled from public sources, is to ensure that such information has been correctly and fairly reproduced and presented. Subject as aforesaid, to the best of the knowledge and belief of the NAL Directors and the NASDAQ Directors (each of whom has taken all reasonable care to ensure that such is the case), the information contained in this announcement for which they accept responsibility is in accordance with the facts and does not omit anything likely to affect the import of such information.