Nasdaq fuels fresh LSE bid talk by lifting its stake to 24 per cent

Nasdaq underscored its pivotal role in the future of the London Stock Exchange by lifting its stake by 5.4 per cent to 24.1 per cent.

For £172.1m, the US-based stock exchange bought almost 13.8 million more LSE shares and, in effect, the ability to block any unwelcome bid from a rival.

Nasdaq dropped a £2.4bn takeover offer in March after failing to win LSE board approval but the latest purchases fuelled speculation that it will try again.

At 1,248p each, Nasdaq paid a large premium to the 950p per LSE share it offered investors two months ago. Among the sellers yesterday were Scottish Widows Investment Partnership and the Swiss investment bank UBS.

Bob Greifeld, Nasdaq's president and chief executive, said the latest buying took its stake "through the important threshold of 20 per cent".

Nasdaq said that breaching that threshold allowed it to include a 24.1 per cent portion of the LSE's earnings in its own accounts.

Nasdaq has paid an average of 1,995p per LSE share for its overall stake. LSE shares rose 12p to a record 1,256.5p yesterday on renewed hopes of a bid.

Analysts described the stake-building as a "win-win" for Nasdaq, either providing a solid platform should it choose to mount a second bid later this year or netting a healthy profit through a sale to a rival bidder such as the New York Stock Exchange.

Mamoun Tazi, an analyst at Man Securities, said: "There is a good chance that Nasdaq will bid. Shareholders want them to bid, they're comfortable with them bidding all the way until the earnings accretion becomes neutral. Nasdaq shareholders do see the value in owning such a company and in the event of a bidding process and they lose, they don't actually lose."

Under Takeover Panel rules, Nasdaq is barred from mounting another bid within six months of its previous offer, unless its secures the board's backing or a rival offer emerges.

Stock exchanges in Europe and the US have been a continual focus of merger and acquisition activity. The LSE's most attractive asset is its trading system, Sets, which outpaces rivals' set-ups.

Separately, the corporate governance advisory body Institutional Shareholder Services urged Euronext shareholders to back a call from its board not to tie its hands in the quickly moving drive towards exchange consolidation.

One Euronext shareholder with links to hedge funds has forced the exchange to ask all its shareholders if they agree in principle to a merger with Germany's Deutsche Börse. This will be put to the vote at Euronext's annual meeting on 23 May.