One is better than two, or three

22 December 2009 By Una Galani Follow @ugalani

The emirate’s effort to build a standalone international stock exchange has failed. Dubai’s larger domestic bourse will now buy Nasdaq Dubai in what looks like a prelude to a full operational merger, and a tieup with Abu Dhabi. One strong player is better than three weak rivals.

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Dubai Financial Market (DFM), the emirate's local stock exchange operator, has agreed to acquire its internationally focused rival Nasdaq Dubai from Nasdaq OMX and Borse Dubai in a cash and shares offer worth $121 million.

Under the terms of the offer, U.S. exchange operator Nasdaq OMX will swap its 33.3 percent stake in Nasdaq Dubai for a 1 percent stake in Dubai Financial Market, equivalent to 40 million shares or $39 million at the end of Dec. 21.

Nasdaq OMX said the transaction could result in a noncash impairment charge of $81 million on the carrying value of its investment in Nasdaq Dubai.

Nasdaq Dubai is 66.6 percent owned by Borse Dubai, a wholly governmentowned entity which also owns 80 percent of DFM.

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