London Stock Exchange shares soared almost a quarter in value today after a £2.4 billion pound bid approach from the Nasdaq Stock Market on Friday reignited speculation of a bid battle.
Although Europe's biggest stock exchange rejected Nasdaq's 950-pence-a-share cash approach as too low, the US number two could improve its proposal or a rival suitor such as the New York Stock Exchange might bid, analysts believe.
Sources familiar with the situation said that Nasdaq might offer a partial share alternative, and that it had the leeway to make a higher offer if necessary. The Daily Telegraph newspaper said today that Nasdaq was considering a dual listing in London and New York to try to woo investors.
Several UK newspapers also claimed yesterday that the New York Stock Exchange (NYSE), the world's biggest stock market, had instructed its bankers, Citigroup, to examine a rival proposal.
A tie-up between the LSE and either Nasdaq or NYSE would create the first major trans-Atlantic stock exchange company and encourage further deals among exchanges that are under pressure to cut costs and fees.
Nasdaq's offer is the third play for the LSE in 15 months, with the UK firm also spurning much lower proposals from Deutsche Boerse and Australia's Macquarie Bank.
Pan-European exchange Euronext has also said it would consider an offer, but most analysts think it will be deterred by the LSE's soaring share price and will look instead to tie-up with Deutsche Boerse.
The LSE has long been viewed as a takeover target after it failed to branch out significantly into new fields in earlier bouts of sector consolidation.