After Ports Failure, Dubai Buys Portion of Nasdaq Stock Market
Through a holding company, Dubai has acquired one-fifth of the Nasdaq stock market, a transaction carried out just a year after the failed bid by Dubai Ports World to acquire several American ports.
"Such a large stake in a U.S. exchange by a foreign government raises some serious questions," Senator Schumer, who led the charge against the port deal, wrote in a letter sent yesterday to the Treasury Department.
Under a complicated agreement, Borse Dubai, which is majority-controlled by the government of the United Arab Emirates, will receive 19.9% of Nasdaq shares, but only 5% of the voting rights. In return, the Nasdaq achieves its goal of gaining a foothold in Europe by purchasing the Nordic stock exchange OMX AB. The Nasdaq and Borse Dubai had originally competed for control of OMX AB. As part of the deal, Borse Dubai will take over Nasdaq's 28% share of the London Stock Exchange.
The Nasdaq deal will go before the Committee on Foreign Investments in the United States, which reviews sales of critical American infrastructure to companies controlled by foreign governments, for approval. Congress passed legislation to strengthen the role of CFIUS, as it is known, following the Dubai Ports World bid. Headed by the treasury secretary, senior officials from the Commerce, State, Defense, and Justice departments also have roles.
"We are going to take a good look at it as to whether it has any national security implications involved in the transaction," President Bush said yesterday in response to reporters' questions.
The chief executive of Nasdaq, Bob Greifeld, said the stock market deal would strengthen the exchange's position in the global financial marketplace. It has been a long time coming for the Nasdaq, which earlier this year failed to acquire the London Stock Exchange. By having a foreign footprint, Nasdaq can be more competitive with its main rival, the New York Stock Exchange, which owns the pan-European index Euronext.
"These strategic actions will provide us with a footprint unlike any other exchange, creating a global leader, with operation in key markets around the world," Mr. Greifeld said in a statement.
Dubai's move is only the latest in a spate of acquisitions abroad, including the purchase of several trophy Manhattan office towers and hotels.
"Dubai is part of the global economy," a senior fellow at the Manhattan Institute, Nicole Gelinas, said. "They are competitive with other major cities for global markets, and we shouldn't have an attitude to shut them out from working with us."
A lawyer at Bryan Cave who is an expert in international trade and investment, Stan Marcus, said, "There are no grounds for concern other than emotion." For Dubai to come back to American shores such a short time after the Dubai Ports World debacle must mean they have received some assurances from the administration that the deal is likely to be approved, he added.
"This expands Nasdaq's global footprint and provides a new gateway to the financial markets of Europe, Asia, and the Middle East — all places where New York is in heavy competition with London for gaining market advantage," the president of the Partnership for New York City, Kathryn Wylde, said.
