Remember when Dubai Ports World had the temerity to think that xenophobia, patriotism, and jingoism wouldn't interfere with its bid to take over Peninsular & Oriental's port operations? Recall how it was shocked out of its complacency when our glorious politicians stood, flags in hand, to protect our ports from "foreigners?"
We're about to get a replay, if history is any guide.
In a hydra-headed agreement, the Nasdaq
Scaring up hysteria
U.S. Sen. Chuck Schumer (D-N.Y.) called Dubai "a secret little group" at the height of the Dubai Ports scaremongering, and not surprisingly, he was also fulminating that the Nasdaq "deal will raise serious questions that will need to be answered."
Admittedly, this seems like a different situation than the Dubai Ports deal. Here, we're talking about a foreign government having direct control over a certain aspect of our financial markets. At least theoretically, some aspects of the arrangement might raise observers' eyebrows.
Two for you, one for me
Borse Dubai will buy OMX, which it will then turn around and sell to Nasdaq for $1.7 billion. As part of that sale, Dubai will get a 19.9% stake in Nasdaq. Dubai will then purchase from Nasdaq a 28% stake in the London Stock Exchange, leaving Nasdaq with about a 3% share in its British counterpart. Nasdaq will then rebrand the DFIX and use technology acquired from the new Nasdaq-OMX combination.
Confused yet? Well, when all is said and done, the London exchange will have a melange of international ownership, since the Qatar Investment Authority also recently acquired a 20% stake in the bourse. Apparently, British politicians aren't as squeamish at the prospect of international finance commingling in their exchanges as their U.S. brethren.
A world of change
Consolidation has been the rule in the exchange world these days. NYSE Euronext
Combinations are nothing new here. What is new is whether we'll once again allow nationalistic chauvinism to interfere with a deal that until now has been rife with cross-border exchanges.
Nasdaq is a recommendation of Motley Fool Inside Value. NYSE Euronext is a recommendation of Motley Fool Rule Breakers. Exchange your losing ways for the market-beating selections of both services with a 30-day risk-free trial subscription.