Credit Suisse would be surprised if Nasdaq made standalone bid for LSE

The ongoing tussle over who will succeed in buying out the London Stock Exchange Group is "broadly positive" for Nasdaq and may pave the way for it to become the next takeover target in that space, Credit Suisse said.

First and foremost, competition for LSE validates Nasdaq's strategy to shift away from transaction businesses and transform itself into a business services company.

On the subject, of whether the Nasdaq might step into the fray, Ashley Serrao and Marcus Carney said in a research report published on 3 March they would "be surprised" if it chose to do so on a standalone basis.

That was because of the potential deal dilution and the strict guidelines on return on invested capital which have been set out by Nasdaq's Compensation Committee for the company's outgoing finance chief, which will probably be retained in the case of his successor.

However, "if it made sense" they would not rule out a partnership approach by Nasdaq, although they believed that would be complicated.

On the other hand, should a tie-up between LSE and succeed, then in their opinion Nasdaq would be a "good strategic fit" at some point down the road.

Among other reasons, scooping up Nasdaq would allow a combined LSE-Deutsche Boerse to expand their US Deutsche Boerse trading footprint and create a technology powerhouse.

Conversely, should ICE succeed in coming away with the prize the significant anti-trust issues which would arise (options, cash equities) would eliminate the possibility of a bid for Nasdaq.

It might also see Nasdaq go on the offensive as its rival focuses on integrating LSE and IDC.

Credit Suisse kept its 'outperform' recommendation and $65 share price target on Nasdaq.