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According to Bloomberg, the Nasdaq Stock Exchange (NASDAQ: NDAQ) is considering selling its 31% stake of the London Stock Exchange, effectively giving up on trying to acquire the company. This money would be used to sweeten the company's bid for Sweden's OMX and help Nasdaq's financial condition.
What kind of money will the Nasdaq be able to receive for the LSE? Recently, the LSE's market value on the London Stock Exchange was $5.2 billion. Assuming Nasdaq sells its 31% block for a 20% discount, the Nasdaq would stand to get nearly $1.3 billion for the stake. Unfortunately, Nasdaq paid $1.33 billion for this stake originally so, unless the Nasdaq can receive the full value of its stake (which is unlikely), it stands to lose money on the deal. According to the company, this sale should produce about 35 cents in EPS next year.
Nasdaq would use this money to buy back stock, retire debt, and increase its offer for the OMX. According to the Bloomberg article, about $1 billion of the proceeds will be used to improve the financial condition of the company (via share buybacks and retiring debt) -- a move that should improve EPS on two fronts.
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