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24 February 2024

New threat to Nasdaq’s OMX takeover

By Staff Writer



A proposed law by the Swedish Government that ensures foreign stock market rules do not apply to domestic exchanges may delay the three-way deal between Borse Dubai, Nasdaq Stock Market and OMX, an analyst told Emirates Business yesterday.

Swedish Financial Markets Minister Mats Odell said on Tuesday the government planned to eliminate any danger of the “Americanisation” of Swedish exchanges.
“We will submit two proposals to guarantee that no new owner of OMX will introduce rules bad for the financial markets in Sweden,” Odell told Reuters. He expected the legislation to be introduced “fairly quickly”.

“I expect [this will result in] a slight delay in closing the OMX deal,” said one analyst at a firm based at the Dubai International Financial Centre, who did not wish to be named.

“The Swedish Government has interfered with this in the past and it is doing so again in spite of its own pronouncements that it is opposed to government interference in business.”

The Swedish Government holds a 6.6 per cent stake in OMX. It is concerned the acquisition of OMX by Nasdaq, expected to be completed in the first quarter of next year, will expose it to US corporate governance rules.
Analysts consider the US rules for exchange-listed firms as defined by the Sarbanes-Oxley Act more stringent. Any regulatory spillover from the US would probably dilute the competitiveness of European exchanges.

OMX is the subject of a $4.9bn (Dh16.8bn) takeover offer from Nasdaq and Borse Dubai that will see Nasdaq as the final owner of OMX. The former rivals in the bidding for OMX have agreed Borse Dubai will acquire OMX and then transfer it to Nasdaq in return for a 19.9 per cent stake in a combined company.

Odell said the legislation would bar regulations that are “unreasonable” in relation to Swedish rules. The Swedish Government will send out proposals on the new legislation for consultation today.

What does this mean for Borse Dubai?
- Any new Swedish law that impacts the acquisition of OMX may be viewed as unacceptable by the United States, putting the three-way deal in jeopardy or delaying it beyond the targeted Q1 closing.

- If the deal shows any likelihood of collapsing, Nasdaq may want to back out of its collateral commitments to Borse Dubai.

- On the other hand, it may see Dubai as a strong platform for regional expansion and continue the proposed partnership.