Nasdaq launches $5.1 billion bid for London exchange

US stock exchange Nasdaq launched a £2.7 billion offer for the London Stock Exchange yesterday in a bid to become the world's first transatlantic bourse.

Nasdaq, which had built up a 25 per cent stake after a previous bid was rebuffed, said it was offering to pay 1,243 pence a share in cash for the rest of the company, Europe's biggest stock market.

The second-biggest US stock exchange also said it had increased its stake to 28.75 per cent by buying a further seven million LSE shares at 1,243 pence apiece, at a cost of £87.8 million, strengthening its hand against any possible counter-bid. The move comes as the world's stock markets are rushing to consolidate, under pressure from customers to cut fees and offer global services, and a group of banks added to the pressure last week by announcing plans to create their own pan-European equity trading platform next year.

Competition between established exchanges and alternative platforms will be made possible by the European Union's Markets in Financial Instruments Directive (MiFID), which comes into effect next year.

"The banks' initiative has undermined the LSE's value and Nasdaq is using this weakness to strike a deal," said one analyst who declined to be named.