Nasdaq OMX may become takeover target given low price-earnings ratio

With the takeover of NYSE Euronext poised to close, buyers seeking the next exchange purchase will find no cheaper target than Nasdaq OMX.

For potential acquirers, Nasdaq OMX has the lowest price-earnings ratio among exchanges valued at more than US$5 billion even after surging 33 per cent this year. The New York-based operator of US and European bourses recently made it easier for suitors by cutting the shareholder approval threshold for removing directors to a simple majority from a two-thirds vote.

"Anyone who has a good calculator and a chequebook ought to be looking," said C.T. Fitzpatrick of Vulcan Value Partners in Alabama. "Particularly when you look at the multiples being paid for other exchanges, Nasdaq looks very attractive."

The industry would benefit from more consolidation, even after IntercontinentalExchange buys NYSE Euronext, as firms wrestle with tougher securities regulations, according to Vulcan Value, a Nasdaq OMX shareholder that also said the firm's valuation makes it a potential target.

Aite Group said Nasdaq OMX has made itself more attractive to suitors by diversifying its business, even though it lags behind some peers in futures. Impediments to a deal could include opposition by politicians concerned about foreign ownership of a US bourse.

Robert Madden, a spokesman for Nasdaq OMX, declined to comment when asked whether the company would be open to selling itself. Nasdaq OMX, which has a market value of US$5.5 billion, has struck its own deals over the years amid chief executive Robert Greifeld's strategy of diversifying the company.