IF, AS expected, the proposed offer from Nasdaq presages a spring and summer bringing further American approaches for the London market, the London Stock Exchange will rely heavily on analysts’ valuations that place on it a stand-alone value even higher than the 950p rejected yesterday.

Analysis from Citigroup has suggested a level of 960p a share, while Keefe Bruyette & Woods has plumped for 990p. Both are higher than the values put on the LSE last summer.

The Exchange defended its rejection of the Nasdaq approach, which came on Thursday night and was considered by the board yesterday. “The company [has] demonstrated that it has extremely strong growth prospects, which have been reinforced by record levels of trading on SETS [the electronic platform] in the first two months of the calendar year,” it said.

The LSE hinted last night that once the promised £510 million is returned to shareholders, which is expected by May 26, it is prepared to enter into talks with any interested bidders.

A spokesman said: “We plan to fulfil our commitment to return that. Once that’s done, there are a number of options we can pursue that would increase value for shareholders.”

Analysts said that the Nasdaq offer represented 28 times projected 2006 earnings, a multiple in advance of the values at which rival European exchanges such as Euronext and Deutsche Börse trade.

The market believes that Nasdaq jumped in as a pre-emptive strike against any New York Stock Exchange offer. By the end of May, if the parties then sit down again to hammer out an agreed deal from one or the other of the New York exchanges, the NYSE will be in a better position to bid because the $2 billion (£1.2 billion secondary offering of its shares will be complete.

“From Nasdaq’s perspective it’s probably good timing to come in with an offer now while NYSE is early in being listed and still getting to grips with the Archipelago merger,” said Andrew Mitchell, an analyst with Fox-Pitt, Kelton.

An analyst with a French bank said: “You can expect the combined Nasdaq-LSE entity to massively reduce costs because they might eventually have only one trading platform and you are really adding two businesses which are not competing with each other.”

Octavio Marenzi, the chief executive of Celent, a financial research and advisory business, said: “A merger between the LSE and Nasdaq makes far more sense than many of the other potential acquirers that have been bandied about.

“Nasdaq has created a strong advantage in terms of its technology architecture, and applying that technology to the LSE would yield significant cost savings. Euronext and Deutsche Börse’s advances have been stymied by their own shareholders, as well as UK regulators.

“The Nasdaq offer is probably the best that is going to come along. The NYSE could, of course, outbid Nasdaq, but given that the technology synergies with NYSE would be considerably lower, NYSE would be hard pushed to match Nasdaq’s offer.”

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