The London Stock Exchange or LSE is a stock exchange located in London,
England, United Kingdom. Founded in 1801, it is one of the
largest stock exchanges in the world, with many overseas
listings as well as British companies.
The LSE is part of the London Stock Exchange Group plc.
Its current premises are situated in Paternoster Square
close to St Paul's Cathedral in the City of London.
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Origin
of share trading -- The
trade in shares in London began with the need to finance two voyages:
The Muscovy Company's attempt to reach China via the White Sea
north of Russia, and the East India Company voyage to India and
the east.
Unable to
finance these costly journeys privately, the companies raised
the money by selling shares to merchants, giving them a right
to a portion of any profits eventually made.
Exchange
The idea soon
caught on (one of the earliest was the Earl of Bedford's scheme
to drain the fens). It is estimated that by 1695, there were 140
joint-stock companies. The trade in shares was centered around
the City's Change Alley in two coffee shops: Garraway's and Jonathan's.
The broker, John Castaing, published the prices of stocks and
commodities called The Course of the Exchange and other things
in these coffee shops.
Nasdaq
In December
2005, the London Stock Exchange rejected a £1.6 billion takeover
offer from Macquarie Bank. The LSE described the offer as "derisory",
a sentiment echoed by shareholders in the exchange. Shortly after
Macquarie withdrew its offer, the LSE received an unsolicited
approach from NASDAQ valuing the company at £2.4 billion. This
too it duly rejected. NASDAQ later pulled its bid, and less than
two weeks later on April 11, 2006, struck a deal with LSE's largest
shareholder, Ameriprise Financial's Threadneedle Asset Management
unit, to acquire all of that firm's stake, consisting of 35.4
million shares, at £11.75 per share.[3] NASDAQ also purchased 2.69 million
additional shares, resulting in a total stake of 15%. While the
seller of those shares was undisclosed, it occurred simultaneously
with a sale by Scottish Widows of 2.69 million shares.[4]
The move was seen as an effort to force LSE to the negotiating
table, as well as to limit the LSE's strategic flexibility.[5]
Subsequent
purchases increased NASDAQ's stake to
25.1%, holding off competing bids for several months.[6][7][8] United Kingdom financial rules
required that NASDAQ wait for a period of time before renewing
its effort. On November 20, 2006, within a month or two of the
expiration of this period, NASDAQ increased its stake to 28.75%
and launched a hostile offer at the minimum permitted bid of £12.43
per share, which was the highest NASDAQ had paid on the open market
for its existing shares.[9] The LSE immediately rejected
this bid, stating that it "substantially undervalues" the company.[10]
NASDAQ revised
its offer (characterized as an "unsolicited" bid, rather than
a "hostile takeover attempt") on December 12, 2006, indicating
that it would be able to complete the deal with 50% (plus one
share) of LSE's stock, rather than the 90% it had been seeking.
The U.S. exchange did not, however, raise its bid. Many hedge
funds had accumulated large positions within the LSE, and many
managers of those funds, as well as Furse, indicated that the
bid was still not satisfactory. NASDAQ's bid was made more difficult
because it had described its offer as "final", which, under British
bidding rules, restricted their ability to raise its offer except
under certain circumstances.
In the end,
NASDAQ's offer was roundly rejected by LSE shareholders. Having
received acceptances of only 0.41 per cent of rest of the register
by the deadline on 10 February 2007, Nasdaq's offer duly lapsed[2].
Responding to the news, Chris Gibson-Smith, the LSE's chairman,
said: "The Exchange™s strategy has produced outstanding results
for shareholders by facilitating a structural shift in volume
growth in an increasingly international market at the centre of
the world™s equity flows. The Exchange intends to build on its
exceptionally valuable brand by progressing various competitive,
collaborative and strategic opportunities, thereby reinforcing
its uniquely powerful position in a fast evolving global sector."[11]
On Monday,
20 August 2007, NASDAQ announced that it was abandoning its plan
to take over the LSE and subsequently look for options to divest
its 31% (61.3 million shares) shareholding in the company in light
of its failed takeover attempt.[12]
In September 2007, NASDAQ agreed to sell the majority of its shares
to Borse Dubai, leaving the United Arab Emirates-based exchange
with 28% of the LSE.[13]
Structure
The LSE is
broken down into the Main Market and Alternative Investments
Market (AIM), as well as EDX London (which handles derivatives).
The independent FTSE Group maintains a series of indices for measuring
the LSE, including the FTSE 100 Index, FTSE 250 Index, and FTSE
350 Index.
References
- [1]
-
"On This Day: July 20, 1990: IRA bombs Stock Exchange", BBC News,
1990-07-20.
-
Patrick, M.; Lucchetti, A., Reilly, D., Taylor, E.. "Nasdaq Acquires 15% of LSE", The Wall Street
Journal, 2006-04-11.
- "Scottish Widows says has sold 2.7 mln LSE shares at 1,175 pence",
Forbes, 2006-04-12.
-
Ortega, E.. "Nasdaq Buys 15 Percent Stake in LSE for $782 Million", Bloomberg News, 2006-04-11.
-
MacDonald, A.; Lucchetti, A.. "In LSE Stakes, Nasdaq Advances, Euronext Falls", The Wall Street
Journal, 2006-05-04.
- Lucchetti,
A.; MacDonald, A.. "Nasdaq Lifts Its LSE Stake to 24%", The Wall Street
Journal, 2006-05-11.
-
Goldsmith, B.; Elliott, M.. "Nasdaq raises LSE stake, making rival bids harder", Reuters, 2006-05-19.
-
Lucchetti, A.; MacDonald, A.. "Nasdaq Makes Bid to Buy Rest of London Stock Exchange", The Wall Street
Journal, 2006-11-20.
- "LSE rejects
£2.7bn Nasdaq offer", BBC News, 2006-11-20.
- "Statement re lapse of Nasdaq’s offer", londonstockexchange.com,
2007-02-10.
- "Sale Update", reuters.co.uk, 2007-08-20.
-
Magnusson, N.; McSheehy, W.. "Dubai to Buy Stakes in Nasdaq, LSE; Strikes OMX Deal", bloomberg.com,
2007-09-20.
- List of Companies. londonstockexchange.com.
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