The London Stock Exchange on Tuesday posted positive figures for its mid-year report, validating the intense interest other markets have shown in acquiring the fast-growing exchange.

The numbers only should increase the salivating from would-be suitors: Through the end of June, 194 companies raised £10.4 billion via initial public offerings on LSE markets, up 64 percent over the same period in a very successful 2005; of those, there were 50 international IPOs, with 43 of them being on the Alternative Investment Market, raising £1.8 billion (US$3.3 billion).

Volume is on the rise, too. In June, there were 7.3 million trades on the SETS (electronic order book) system, up 77 percent from the same month in 2005. For the quarter ended June 30, overall revenues were £84.3 million, up from £67.7 million in the same period in 2005.

The report led LSE Chairman Chris Gibson-Smith, speaking at the annual general meeting, to say that "every aspect of our market is growing faster than other major equity markets."

With so much going right, buyout rumors have many people nervous: No one wants a new parent to arrive and gum up the works.

Gibson-Smith is aware of that, and even more aware of what LSE means to its home city. He warned that LSE and the prosperity of London itself are "inextricably intertwined," and said that the exchange's future "matters deeply" to London's international financial market. Mentioning that financial services in London contribute 7 percent to the UK's gross domestic product and that the prestige of a strong international market provides "significant but intangible global influence" for Britain, he said the board "fully understands that London's stakeholders do not want a combination of exchanges that might lead to the erosion" of those benefits to the city.

Nasdaq Hungry, But Small Firms Worried

Meanwhile, the world's stock exchanges have been reaching for each other like kids playing tag. LSE has garnered heavy interest. It's been courted by Nasdaq; Macquarie Bank, of Australia; Deutsche Boerse, of Frankfurt, Germany; and the European exchange Euronext.

For a while it was rumored that New York Stock Exchange owners NYSE Group wanted in, but NYSE eventually turned to Euronext, announcing last month a $10 billion merger agreement and souring merger discussions between Euronext and Deutsche Boerse.

Nasdaq withdrew its $4.2 billion offer in late March after being rebuffed by LSE, even though Nasdaq's bid topped the offer made by Macquarie by about 60 percent. (LSE had turned away Macquarie, too.) But since withdrawing, Nasdaq systematically has bought up LSE shares from other holders, now having crossed the "important threshold," it said, of 25 percent - 25.1 to be exact - and making it difficult for anyone else to acquire LSE.

The round-robin continues. This week, rumors surfaced of Borsa Italiana joining Deutsche Boerse. Driving all this action, said Peter Astiz, partner at DLA Piper Rudnick Gray Cary in East Palo Alto, Calif., is worldwide commerce.

"It's a global world, and it's hard to remain independent geographically," he told BioWorld Today, adding that the exchanges "have become pure businesses."

The large exchanges, he said, "want to participate where companies do listings."

That increasingly has been on LSE, but the worry is that what was seen as a haven of sorts for small biotechs - a place where Sarbanes-Oxley (SOX) could be avoided, a place to access capital otherwise unobtainable and a place friendly to innovative companies - will disappear.

"There is a valid concern that [LSE] is something that seems to be working and going in the right direction," Astiz said, and any new owner might change the rules. But Nasdaq is less interested in adding new regulation than it is in consolidating the market, "so it can control it," he said.

Last month, Callum McCarthy, chairman of the Financial Services Authority in the UK, said both the FSA and the SEC do not anticipate SOX applying to firms quoted on LSE, if Nasdaq does indeed buy it.

Astiz agreed, saying Nasdaq cares more about LSE continuing to "flourish," with future earnings reports similar to the one just released.

"That's how they make their money," he said.

Besides, "the vast majority of companies that are going to AIM could not do an offering in the U.S. in the current environment," and thus lining up the two markets is not "an apples-to-apples comparison," Astiz said. There is some overlap, but in general, those markets do not have the same investor base.

Nasdaq cannot exceed a 30 percent stake without making another formal buyout offer for LSE, and LSE has made it clear it has more on its mind than just money. But chances are good that even the somewhat defiant LSE eventually will be acquired, if not by Nasdaq then by another exchange.

"I think the logical answer is [LSE] gets taken over," Astiz said. "There isn't a role for a major independent exchange. The fear of any exchange that doesn't have that linkup, is that they will get run over by those that do."

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