(Repeats story published late on Wednesday)
By Jonathan Spicer
NEW YORK, Sept 3 (Reuters) - Nasdaq OMX Group Inc <NDAQ.O>
could bid for a majority stake in the Prague Stock Exchange,
which is on the auction block and would give the U.S. company a
foothold in the hotly contested region, sources familiar with
the situation said.
A source at the privately held Prague exchange, which is
valued at more than $300 million, said Nasdaq has showed
interest.
A second source with direct knowledge of the situation told
Reuters a stake in exchanges based in Central or Eastern Europe,
such as the Prague exchange, "is certainly something that is
consistent with what OMX has looked at in the past."
"The Prague exchange is running a pretty broad process, so I
think you can assume that there are a lot of different
participants taking a look," said the second source, who spoke
on the condition of anonymity.
Nasdaq, which completed its merger with Nordic exchange OMX
earlier this year, said it does not comment on speculation.
But analysts said a bid from Nasdaq would avoid the politics
that could snag a bid from neighboring European exchanges, which
are keen to absorb smaller peers that fail to attract many new
listings, such as the Czech Republic market.
"Because Nasdaq is a big player in the world, there would be
a lot of interest among small exchanges to be associated with
it," said Bernardo Mariano, an analyst specializing in privately
held exchanges at Connecticut-based advisory firm Equity
Research Desk.
"This would be a great move for Nasdaq to create a beachhead
in Eastern Europe, which has been a very hard market to
consolidate,"
The Prague Stock Exchange (PSE) and its owners announced on
Aug. 6 a formal search for a partner to buy a majority stake.
Its biggest shareholder, investment bank Patria Finance, later
said shareholders may sell a stake of more than 90 percent by
the end of the year.
Patria Finance said on Wednesday it had no comment on a
possible Nasdaq bid.
SUITORS CIRCLING
Nasdaq and U.S. rival NYSE Euronext <NYX.N> have moved
aggressively in recent years to stay afloat in the rapidly
consolidating world of exchanges, where upstarts chip away at
the established giants.
Analysts, as well as a small PSE stakeholder, have named the
Warsaw exchange and European heavyweight Deutsche Boerse
<DB1Gn.DE> as other possible suitors for the Prague exchange.
Last month, the CEO of Vienna exchange operator Wiener
Boerse told Reuters it would likely bid for the PSE. Last week,
Czech newspaper E15 reported Nasdaq was interested in buying the
Prague market, citing sources.
"Nasdaq, as an outsider, probably has a better chance to
consolidate that market than Warsaw or Vienna because of the
rivalry in local politics in Eastern Europe," Equity Research
Desk's Mariano said.
Competition sharpened in the region late last year with the
Markets in Financial Instruments Directive (MIFID), intended to
increase trading competition in the European Union.
In the race to grow, Warsaw recently overtook Vienna in
market capitalization. The Prague exchange is third in the
region, where a plan to create a single stock exchange has for
now been abandoned.
Prague trades equities, debt and futures contracts, and its
main SPAD trading segment lists 14 stocks with a market
capitalization of about $114 billion.
Trading on the exchange has ramped up in recent years due to
an improved regulatory environment and the country's economic
convergence with Western Europe. However, it has attracted only
six new listings in the last decade.
Nasdaq has said it is looking to expand in Europe and trade
in new asset classes. To that end, it announced the buyout of
European power exchange NordPool earlier this year.
Although the operator of the Nasdaq Stock Market says it
wants some time to digest recent acquisitions, earlier this
month, it pushed forward the integration timetable for both OMX
and options venue Philadelphia Stock Exchange.
The source at the Prague mart said Goldman Sachs is
collecting the bids for a possible stake.
(Additional reporting by Jana Mlcochova in Prague; editing by
Jeffrey Benkoe and Gerald E. McCormick)
