Exchange on fire

Sign outside the LSE in the City of London. Photograph: Stefan Rousseau/PA
Yesterday Nasdaq dropped its £2.4bn bid for the London Stock Exchange, becoming the latest member of a small but steadily growing club of foreign companies that have tried and failed to buy the exchange, writes Charlotte Moore.

For the last 15 months, LSE's chief executive Clara Furse has had her hands full as one company after another has bid for the company. In December 2004 she rejected a £1.3bn bid from the Deutsche Börse, which backed out of the race the following March. In February 2005, Euronext, the pan-European exchange, made an indicative bid but did not follow through. Last December, the LSE rejected a £1.5bn bid made by the Australian bank Macquarie, which dropped its bid this February.

The LSE's steadily rising share price has been the key to the company staying independent. Each time a bid was made for the exchange, the share price continued to rise. Each would-be suitor decided to drop its bid rather than increase their offer to a level that would have been irresistible to LSE shareholders.

So why has the share price risen so consistently?