STOCKHOLM - Borse Dubai, which is engaged in a battle with Nasdaq for control of the OMX stock exchange, did break Swedish financial regulations, the Swedish Financial Inspecotrate ruled, Aug. 23.
By distributing a press release Aug. 9, Borse Dubai was in effect launching a public takeover bid, the regulator decided. As a consequence, Borse Dubai breached the applicable Act on Takeovers in the Stock Market.
"When Borse Dubai made the press release public it had not undertaken to follow the rules that Nordic Exchange Stockholm has stipulated for such offers," the FI ruling stated. As a result, the FI said Borse Dubai breached the law.
Only on 16 August did Borse Dubai undertake to follow the rules of the Nordic Exchange. Swedish law dictates that takeover bids must be announced to ensure that a bidder gives shareholders sufficient time and information to enable them to reach a properly informed decision on a bid and to prevent market distortion.
Despite the embarrasment caused by its oversight and the questionable way it has mounted its counter-bid to Nasdaq, it looks as if Borse Dubai still has a good chance to take control of OMX, which runs all three Baltic stock exchanges as well as other Scandinavian markets. The FI noted that Borse Dubai has subsequently complied with the Act and said it would take "no further action."
For its part, Borse Dubai said it "acknowledges the conclusions" of the Swedish regulator and that it still believes its offer "is in the best interests of OMX and its shareholders."
Borse Dubai is offering a 3 billion euro all-cash bid to investors, as against Nasdaq's 2.7 billion cash-and-shares offer.
Speaking to the Financial Times newspaper, Per Larsson, chief executive of Borse Dubai (and a former chief executive of OMX), insisted the Dubai-based operator had acted in good faith.
"We have the superior offer. Over the past week we have received positive feedback from shareholders about our bid," said Mr Larsson.
Meanwhile Bob Greifeld, president and chief executive officer of Nasdaq has launched his own charm offensive in the Nordic region to highlight the Nasdaq bid.
"We remain convinced that our offer to merge with OMX is in the best short- and long-term interests of all OMX shareholders. As the global leader in the exchange industry, we have more than 36 years of experience in generating value for our listed companies and the trading community, with a proven track record of delivering value to our shareholders. A combined company [would have] the best technology, most liquid trading platforms, over 4,000 listed companies and a record of successful integration. We believe this compares favorably with the Dubai exchange, with only 51 listed companies dominated by one issuer," Greifeld said.