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Way cleared for Borse Dubai bid

The regulator said, in an unofficial translation of a statement on its web site, that Borse Dubai had breached the Act on Takeovers in the stock market but Borse Dubai had subsequently complied with the Act. Borse Dubai has therefore avoided a "special charge" being levied upon it, which could have been as high as SEK100 million ($14 million), or as low as SEK50,000. The SFSA also said that it "is of the opinion that there is no ground to prohibit Borse Dubai's public takeover bid for shares in OMX AB".

Borse Dubai came under scrutiny when it undertook a bookbuilding process earlier this month, taking a 4.9 per cent share in the Swedish exchange group OMX AB and exercising an option to buy an additional 22.5 per cent stake in it at 230 kroner ($34) a share. A few days later Borse Dubai offered $4 billion for OMX, topping the $3.7 billion bid the US exchange, Nasdaq, had made in May.

In response to SFSA questions about the option contracts into which it had entered, Borse Dubai said that the issuance of the Press release on the morning of 9 August (a second one was released in the afternoon) was undertaken to

keep the market informed of the bookbuilding process. It stated: "The Press release was made public only to avoid any insider trading by or on behalf of any party. The purpose of the bookbuilding-process was to acquire a large stake in OMX-shares from a group of investors that had been selected in advance."

The statement also said that two non-Swedish institutional investors had contacted the Borse Dubai representative "on their own initiative". Moreover, "there is at least one arrangement outside the bookbuilding-process by which Borse Dubai has had the opportunity to acquire shares on August 9, 2007, before the book was closed for the day," it said. Responding to the SFSA's decision Borse Dubai said it acknowledged the conclusions announced by the SFSA, and looked "forward to continuing to work with them as our offer for OMX progresses".

Nasdaq and Borse Dubai are in fierce battle to win ownership of the Swedish exchange. Both sides are working to convince shareholders that each is offering the better deal with long-term strategy, rather than just price, being fought over. Borse Dubai said yesterday: "We continue to believe that our all cash offer of SEK 230 per share for OMX is in the best interests of OMX and its shareholders and represents long-term value for OMX stakeholders by participating in new opportunities in high growth markets as part of the combined OMX-Borse Dubai group."

The Swedish Takeover Act

The Swedish Takeover Act is a public offer to holders of shares issued by a Swedish or foreign limited company for the transfer of all or part of such shares.

A public takeover bid may only be issued by a party which has made an undertaking to the stock exchange or authorised marketplace on which the target company's shares are listed to comply with the rules determined by the stock exchange ...

A bidder shall...notify (the SFSA) of the offer and the undertaking made to the stock exchange or authorised marketplace.

The bidder shall draw up an offer document within four weeks of the announcement of the offer and apply to (the SFSA) for its approval. The four-week period may be extended if special reasons apply.

(The SFSA) may permanently prohibit an offer if it concludes that the provisions of the Takeover Act have not been complied with.

If a bidder has failed to issue an undertaking to follow the rules of the stock exchange or the authorised marketplace regarding public takeover bids and, as a result, (the SFSA) has prohibited the offer, (the SFSA) shall decide that the bidder shall pay a special charge of not less than SEK50,000 and not more than SEK100 million ($14 million).

If a prohibition has been issued (the SFSA) may decide that the party to whom the prohibition has been addressed may not represent the shares it holds in the company to which shareholders a public takeover bid is being made.