LONDON, Dec 12: The London Stock Exchange (LSE) on Tuesday once again rebuffed Nasdaq’s second hostile bid within a month to take over the exchange, stating that the offer of £2.7 billion substantially undervalued the LSE and failed to reflect its unique strategic position and the powerful earnings and operational momentum in the business.

The LSE website announcement said the board will be writing to shareholders to explain its reasons for rejecting Nasdaq’s offer. In the meantime, it strongly recommended the shareholders to take no action in respect of Nasdaq’s offer.

According to the LSE, Nasdaq has defined “final” in its offer document as meaning that its offer will not be revised except: (i) upon the recommendation of London Stock Exchange Board; or (ii) if a firm intention to make a competing offer for London Stock Exchange is announced, whether or not subject to any preconditions.

”To the best of the knowledge and belief of the directors of the exchange (who have taken all reasonable care to ensure that such is the case), the information contained in this announcement for which they accept responsibility is in accordance with the facts and does not omit anything likely to affect the import of such information,” the LSE announcement said.

As documents for the £12.43 a share offer were posted to LSE shareholders, Nasdaq chief executive Robert Greifeld warned that the London exchange was facing fierce competition and he again stressed that Nasdaq’s terms will not be increased.

Mr. Greifeld said: "We continue to believe that the offer of £12.43 per share represents a full and fair value for LSE shareholders, taking into account both the success of the business but also the new competitive threats which the LSE will face in 2007 and beyond."

The offer documents reveal that Nasdaq, which holds a 28.75pc stake in the LSE, has reduced the level at which it can declare its offer unconditional from 90pc to just over 50pc.

This means the US exchange needs to win acceptances from holders of just over 21pc of the shares for its offer to succeed.

However, shares in the LSE have been trading significantly ahead of the Nasdaq terms as the market bets on a higher offer. They were unchanged in early trading on Monday morning at £13.20. The closing deadline to the offer is 3pm on January 11, 2007.