Nasdaq is abandoning its 797 million pound ($1.58 billion) stake in the London Stock Exchange, five months after its takeover bid failed, as it focuses on buying Nordic exchange operator OMX.
Nasdaq Stock Market Inc, which needs overseas acquisitions to gain an international foothold, is locked in a $4 billion bidding war with Borse Dubai for OMX, which owns exchanges in Sweden, Denmark, Finland, Iceland and the Baltic states.
Nasdaq's cash-and-share offer has eroded due to a fall in share prices, which at Friday's close represented roughly 204 crowns for each OMX share, compared with Dubai's all-cash bid of 230 crowns, which it revealed on Friday.
In the absence of either an OMX or a London Stock Exchange acquisition, international opportunities will be limited -- enough potentially to turn Nasdaq into the target, FBR analyst Matt Snowling said.
UBS and JPMorgan are helping Nasdaq decide what to do with the 61.3 million LSE shares, which are valued at about 797 million pounds at current prices.
Nasdaq said on Monday it wants to sell its LSE shares, but could not guarantee that it would.
New York-based Nasdaq, which bought its shares of the LSE over time at an average of about 11 pounds apiece, could amass a paper profit of $245.2 million at current level.
LSE shares were up 2.1 percent at 1,296 pence each at 1035 GMT. Nasdaq shares closed at $31.75 on Friday.
Nasdaq estimated the LSE stake sale would boost its stand-alone 2008 earnings per share by about 30 cents to 35 cents each.
That would lift Nasdaq's 2008 earnings per share to between $2.00 and $2.05, according to Reuters Estimates, and would lower its price-to-earnings multiple to just 15.8 times from 18.7 times, versus 20 times for its peers.
Nasdaq said it would use $1 billion of proceeds from any sale to retire senior term debt and intends to use the reminder to buy back shares.
LSE officials declined to comment.
Since Nasdaq's takeover for the LSE failed earlier this year, the LSE has agreed to acquire Milan exchange Borsa Italiana for 1.6 billion pounds ($3.16 billion), a deal set to dilute Nasdaq's stake to about 22 percent.
Borse Dubai's offer for OMX represents a 13 percent premium to Nasdaq's offer of 0.502 shares of Nasdaq shares plus 94.3 crowns in cash for each OMX share.
(Additional reporting by Jeffrey Goldfarb in London and Lilla Zuill in New York)