December 20, 2006	Wednesday	Ziqa'ad 28, 1427

LONDON, Dec 19: The London Stock Exchange (LSE) on Tuesday pledged to raise its total dividend by at least 50 per cent as it reiterated its rejection of Nasdaq’s £2.7 billion hostile bid.

In a shareholder circular issued here on Tuesday the Exchange dismissed the US offer as "wholly inadequate" and said that it would pay shareholders a dividend of at least 18p a share next year.

The LSE also forecast a significant rise in third-quarter earnings. The board said that adjusted basic earnings per share (EPS) for the three months to December 31 would be at least 14.5p, up 48 per cent or more on the same quarter last year.

The Exchange said that this strong performance justified the board’s rejection of a 1243p-a-share bid that significantly undercuts the market price of 1300p-plus and represents the lowest price that Nasdaq can offer under the Takeover Code.

The circular highlights the Exchange Group’s position at the centre of the globalisation of capital markets, the exceptional resilience and quality of the business and its ability to compete successfully in a fertile environment for highly efficient listing and trading platforms.

The circular includes the Exchange Group’s forecast for adjusted basic earnings per share for the 12 months to 31 Dec 2006, which is expected to be not less than 50.4p per share, an increase of no less than 58 per cent.

The board also announced its intention to recommend a FY 07 final dividend of not less than 12p per share, bringing the total dividend for FY 07 to at least 18p per share, an increase of at least 50 per cent compared to FY 06.

Chris Gibson-Smith, Chairman of the Exchange Group, commented: “Over the last twelve months, records have tumbled in terms of money raised as well as the volume and value of trading on our markets.

This is further confirmation of the significant progress we are making towards the realisation of our vision to be ‘the world’s capital market’. For the second time this year, Nasdaq is offering a wholly inadequate price for the company and shareholders should reject the offer.”

Nasdaq needs to win support from holders of only 21 per cent of the shares but the LSE price, which eased 3p to 13.17p in early trading this morning, remains comfortably above the US exchange's terms.

Nasdaq has said it would take control if it won just over 50 per cent of the shares, rather than its earlier 90 per cent target. It already holds just over 28 per cent and some 30pc of the shares are in the hands of hedge funds.

Clara Furse, chief executive of the LSE, has spent much of the past two years fighting off hostile takeover approaches and says the best future for the bourse is as an independent company. The Nasdaq is keen to capture the LSE to bolster its international position as exchanges consolidate globally.

Bob Greifeld, chief executive of Nasdaq, is taking his offer directly to the LSE's shareholders after Furse rebuffed it.