Securities Exchange Act of 1934
No Action, Interpretive and/or Exemptive Letter:
The Nasdaq Stock Market, Inc.
Response of the Office of Mergers and Acquisitions
Division of Corporation Finance
November 20, 2006
Eric J. Friedman, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
4 Times Square
New York, NY 10036
Offers by The Nasdaq Stock Market, Inc. for all Ordinary Shares and B Shares of London Stock Exchange Group plc
Incoming Letter dated November 20, 2006
Division of Market Regulation File No. TP 07-16
Dear Mr. Friedman:
We are responding to your letter dated November 20, 2006 to Brian V. Breheny and Mara L. Ransom in the Division of Corporation Finance and James Brigagliano in the Division of Market Regulation. A copy of your correspondence is attached. By doing this, we avoid having to recite or summarize the facts set forth in your letter. Each defined term in this letter has the same meaning as in your November 20, 2006 correspondence, unless otherwise indicated.
Based on the representations in your November 20, 2006 letter but without necessarily concurring in your analysis, the Commission hereby grants an exemption from Rule 14e-5 under the Exchange Act to permit the Prospective Purchasers to purchase Ordinary Shares outside the Ordinary Share Offer and the Broker to engage in the Trading Activities in the LSE Securities through the expiration of the Offers, particularly in light of the following facts:
- The Ordinary Share Offer is required to be conducted in accordance with the City Code as well as the rules and regulations of the UK Listing Authority and the LSE ("Listing Rules");
- London Stock Exchange Group plc, a public limited company incorporated under the laws of England and Wales, is a "foreign private issuer," as defined in Rule 3b-4(c) under the Exchange Act;
- Any purchases of Ordinary Shares of London Stock Exchange Group plc by the Prospective Purchasers and all purchases of LSE Securities by the Affiliates and Departments of the Broker will be subject to the City Code;
- All purchases of the LSE Securities by the Broker through its Affiliates and Departments during the Ordinary Share Offer will be effected in the ordinary course of business and will not be undertaken for the purposes of promoting or otherwise facilitating the Offers, or for the purpose of creating actual, or apparent, active trading in, maintaining, or affecting the prices of the Shares;
- Dresdner Kleinwort Securities LLC, an affiliate of the Broker, is registered under Section 15(a) of the Exchange Act;
- The Broker maintains and enforces written policies and procedures that are reasonably designed to prevent the flow of information to or from its Affiliates and Departments that might result in a violation of the federal securities laws through the establishment of information barrier policies and procedures;
- Each of the Affiliates and Departments of the Broker that conducts the Trading Activities has no officers (or persons performing similar functions) or employees (other than clerical, ministerial, or support personnel) who direct, effect, or recommend transactions in the LSE Securities and who are also involved in providing the Company with financial advisory services or dealer manager services until such time as the Ordinary Share Offer is completed; and
- The existence of the Memorandum of Understanding on Exchange of Information between the Commission and the United Kingdom Department of Trade and Industry in Matters Relating to Securities and the United States Commodity Futures Trading Commission and the United Kingdom Department of Trade and Industry in Matters Relating to Futures dated September 25, 1991.
The Commission grants this exemption from Rule 14e-5 under the Exchange Act to permit the Prospective Purchasers to purchase or arrange to purchase Ordinary Shares and the Affiliates and Departments of the Broker to purchase or arrange to purchase LSE Securities otherwise than pursuant to the Ordinary Share Offer, subject to the following conditions:
- 1. No purchases or arrangements to purchase Ordinary Shares by the Prospective Purchasers, otherwise than pursuant to the Ordinary Share Offer, or LSE Securities by the Affiliates and Departments of the Broker shall be made in the United States;
- 2. The Offer Document shall disclose prominently the possibility of, or the intention to make, purchases of Ordinary Shares by the Prospective Purchasers and of LSE Securities by the Affiliates and/or Departments of the Broker during the Ordinary Share Offer;
- 3. The Prospective Purchasers and Broker shall disclose in the United States information regarding such purchases to the extent such information is made public in the United Kingdom pursuant to the City Code;
- 4. The Prospective Purchasers and Broker shall comply with any applicable rules in the United Kingdom, including the City Code and Listing Rules;
- 5. The Prospective Purchasers and the Broker shall provide to the Division of Market Regulation ("Division"), upon request, a daily time-sequenced schedule of all purchases of LSE Securities made by any of them during the Ordinary Share Offer, on a transaction-by-transaction basis, including:
- a. size, broker (if any), time of execution, and price of purchase; and
- b. if not executed on the LSE, the exchange, quotation system, or other facility through which the purchase occurred;
- 6. Upon the request of the Division, the Prospective Purchasers and the Broker shall transmit the information as specified in paragraphs 5.a. and 5.b. above to the Division at its offices in Washington, D.C. within 30 days of its request;
- 7. The Prospective Purchasers and the Broker shall retain all documents and other information required to be maintained pursuant to this exemption for a period of not less than two years from the date of the termination of the Ordinary Share Offer;
- 8. Representatives of the Prospective Purchasers and Broker shall be made available (in person at the offices of the Division in Washington, D.C. or by telephone) to respond to inquiries of the Division relating to their records; and
- 9. Except as otherwise exempted herein, the Prospective Purchasers and Broker shall comply with Rule 14e-5.
Based on the representations and the facts presented in your letter dated November 20, 2006, the staff of the Division of Corporation Finance will not recommend enforcement action to the Commission pursuant to Rule 14e-1(c) under the Exchange Act if the Offers are conducted as described in your letter.
The foregoing exemption and no-action position are based solely on the representations and the facts in your letter dated November 20, 2006, as supplemented by telephone conversations with the Commission staff. The relief is strictly limited to the application of the rules listed above to this transaction. You should discontinue this transaction pending further consultations with the staff if any of the facts or representations set forth in your letter change.
We also direct your attention to the anti-fraud and anti-manipulation provisions of the federal securities laws, including Sections 9(a), 10(b) and 14(e) of the Exchange Act and Rule 10b-5 thereunder. The participants in the transaction must comply with these and any other applicable provisions of the federal securities laws. The Divisions of Corporation Finance and Market Regulation express no view on any other questions that may be raised by the proposed transaction, including but not limited to, the adequacy of disclosure concerning, and the applicability of any other federal or state laws to, the proposed transaction.
For the Division of Corporation Finance,
Brian V. Breheny
Chief, Office of Mergers and Acquisitions
Division of Corporation Finance
For the Commission,
By the Division of Market Regulation
Pursuant to delegated authority,
James A. Brigagliano
Acting Associate Director
Division of Market Regulation
The Incoming Letter is in Acrobat format.