The Nasdaq offer was a whopping 40 percent higher than its previous offer in March. It was also in the David-slays-Goliath mode, as the Nasdaq’s own market cap is just $4.1 billion - $1 billion less than its offer to the LSE. Nonetheless, the exchange believes it can borrow the cash to acquire its bigger rival.
Of course, the Nasdaq does have a strong bargaining position: it already owns a big chunk of the LSE. In fact, Nasdaq it announced today that it had raised its stake in the exchange to 28.75 percent.
The deal is unlikely to be approved at its current levels, however. The Nasdaq bid 1,243 pence for the remaining shares in the exchange, well below the 1,300 pence those shares were fetching on the open market just last week. Most experts expect the LSE to demand a bigger payout before it even considers the offer.
And in fact, later in the day, the LSE quickly and confidently dismissed the Nasdaq's bid out of hand. Without even waiting around to meet with Nasdaq executives, the LSE said the deal was not appropriate at the named levels. The Nasdaq, in turn, said its offer reflected full market values, and vowed to take to vote directly to shareholders. More than likely, the fate of the exchange will be in the hands of market sentiment: if the LSE can maintain a share price above 1,243 pense, investors will likely vote the deal down; if not, expect investors to approve the deal.