Qatar makes surprise move in OMX ownership arrangements

Unexpected acquisition comes in middle of deals with Nasdaq and Dubai

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Just as the American technology exchange Nasdaq and Dubai Stock Exchange were announcing that they were calling a halt to their competition for the ownership of the Nordic exchange operator OMX, the Qatar government investment fund QIA made a surprise announcement that it had bought 20 per cent of the London stock Exchange, and urged OMX owners to wait.
     Later in the day Qatar said that it had bought 9,98 per cent of OMX shares.
     OMX share prices had been falling on Wednesday afternoon when news of the agreement between Nasdaq and Borse Dubai appears to have been leaked to the market. However, news of the Qatar operation made share prices shoot up.
     
What was still completely up in the air was what would ultimately happen to the deal between Nasdaq and Borse Dubai.
     The aim of the complicated operation was to reach a situation in which Nasdaq would own OMS, and Borse Dubai would have a holding of nearly 20 per cent in Nasdaq.
     At the same time Nasdaq would sell Borse Dubai 28 per cent of the London Stock Exchange, and would buy shares of DIFX, the parent company of Borse Dubai.
     Nasdaq chief executive Robert Greifeld said in Stockholm on Thursday that the combination would create the widest global network of stock exchanges and their customers, all linked by technology." Borse Dubai would start to use the name Nasdaq DIFX and would be given access to the technology employed by the Americans and by OMX.
     
Just as the press conference of Greifeld and Borse Dubai director Ezza Kazim was underway, it was reported that QIA was urging OMX shareholders to desist from taking action, and to wait for an announcement that would be coming later.
     Market observers assumed that a competing offer was coming from Qatar, to keep Dubai from getting too great a foothold in the lucrative financial markets in the Persian Gulf.
     Both Greifeld and Kazim refused to comment on the news from Qatar.
     
Nasdaq has previously tried to buy the London Stock Exchange. The attempt failed, and attention was focused on OMX, which owns the stock exchanges in Helsinki and in other parts of the Nordic region, and has a foothold in the Baltic Countries. Nasdaq's offer was challenged by a competitive bid from Dubai.
     Under the new arrangements Nasdaq would avert all auctions with respect to OMX, and Dubai would get a powerful minority position in Nasdaq and LSE.
     However, the operation would require the approval of officials in Europe and the USA. US trade officials recently prevented a Dubai-based investor from gaining control over US seaports.
     The Chairman of the Economic Committee of the US Senate, Charles E. Schumer, was quoted by the Associated Press of expressing scepticism of allowing capital in the Persian Gulf from becoming a major owner of an American stock exchange.
     
Swedish economic crime investigators were considering a possible investigation into suspected insider trading.
     Trading with OMX shares had to be suspended on Wednesday following the plunge of its share price. It appears that the news of the deal with Borse Dubai and Nasdaq had been leaked, and traders assumed that the price war over OMX would not continue to raise prices.
     In light of the announcement by Qatar, it appears that in addition to committing a crime, possible users of insider information would have also made an economically unwise move by dumping OMX stock.


Links:
  Dubai stock exchange company makes bid to buy out OMX (20.8.2007)
  OMX website

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