Nasdaq could be next after LSE deal, says Credit Suisse

Credit Suisse analysts speculate Nasdaq could be the next target as global exchange groups look to bulk up amid intense competition.

Nasdaq could become the next exchange group to be acquired if the planned merger talks with the London Stock Exchange (LSE) and Deutsche Boerse go ahead, according to an analyst note from Credit Suisse.

According to research analysts Ashely Serraro and Marcus Carney at the bank, the note says Nasdaq would be a good strategic fit for the combined LSE-Deutsche Boerse group for a number of reasons.

These include expanding the US footprint of Deutsche Boerse beyond its US options exchange, ISE, the “creation of a technology powerhouse with LSEG’s Millennium… further scaling of the index/data businesses and the ability to unite its electronic FX platform (360T) and Nasdaq’s Treasury platform (eSpeed) to “go-head-to-head with ICAP’s EBS-Brokertec.”

However, the note says if IntercontinentalExchange (ICE) goes ahead with a bid for the LSE and is successful, this would take Nasdaq off the table.

Instead, an ICE-LSE deal could “pave the way for Nasdaq to go on the offense in search of larger information services/data deals, as ICE, who has proved to be a meaningful acquirer with deep pockets, focuses on integrating LSEG and ICE,” the note added.

In addition, the Credit Suisse team said it would be surprised if Nasdaq entered the bidding war for the LSE on a standalone basis, but “we would not rule out a partnership approach if it makes financial sense.”

In 2011, Nasdaq partnered with ICE to thwart Deutsche Boerse’s bid for NYSE Euronext, however ICE decided to go it alone and in 2013 completed a takeover of NYSE, spinning out Euronext as an independent company.

Nasdaq has long been speculated to link up its Swedish-based Nasdaq OMX with the LSE. In 2006, its bid of £2.4 billion for the LSE was rejected by the company. It then tried to buy the remaining 69% of LSE shares it didn’t own at £12.43 per share. LSE shareholders rebuffed the approach, and Nasdaq later sold its stake at a profit.