If market rumours are to be believed, the London Stock Exchange (LSE) may face a hostile take-over bid, as middle-east emirate Abu Dhabi engages Borse Dubai for a 20 percent stake acquisition.
The Abu Dhabi Emirate is attempting to take control of Dubai’s Financial Empire and has prepared a $1 billion war chest to execute the plan. If successful, the plan will see the merger of Borse Dubai, Abu Dhabi Securities Exchange and Dubai International Financial Centre.
However, the news may start a full blown take-over bid as fellow state Qatar also nurtures the ambition of being the leading financial group in Middle East’s burgeoning financial services industry. Qatar holds a 15 percent stake in LSE.
The latest hostile bids remind of attempts that became a routine affair in the last decade, forcing former LSE Chief Executive Dame Clara Furse to rearrange her holidays to fend off predators.
In 2004 Deutsche Borse of Germany attempted a coup, followed by a hostile take-over bid by pan-European stock exchange Euronext.
In 2005, Australian Bank Macquarie made a £1.6 billion bid which was followed by US giant NASDAQ.
In March this year, Essa Kazim – Chairman of Borse Dubai said negotiations are being held for a possible merger of Dubai and Abu Dhabi stock exchanges.
Turnover in the Abu Dhabi stock exchange has plummeted and Borse Dubai is set to witness its lowest transaction count in six-years in 2010 due to the financial crisis hitting the region.
After Dubai property prices crashed, Abu Dhabi had bailed Dubai out, which has debts at an estimated level of £71 billion.
Borse Dubai recently sold off its stake in NASDAQ OMX and exited the business which set off rumours of LSE being the next possible target.