The Dubai stock exchange has launched a $4bn (£2.02bn) cash bid to buy its Nordic counterpart OMX.
The Dubai exchange is looking to expand in growing markets
The offer price trumps the $3.7bn recommended cash-and-share offer made by the US Nasdaq in May and could prompt a bidding battle for the firm.
Stockholm-based OMX runs the Nordic Exchange, which gives investors access to the biggest firms in Scandinavia and the Baltic states.
The move reflects the growing demand for consolidation in the sector.
Speculation that the government-backed Borse Dubai, which runs the emirate's stock market, would pounce on OMX has heated up since last week when it bought a 27.4% stake in the exchange for 230 kronor ($33.3; £16.7) per share.
That figure beat Nasdaq's 208.1 kronor per share offer made to buy OMX in May and is the price the Dubai exchange would pay for the rest of OMX shares if its bid is successful.
The development comes amid a wider trend of consolidation among stock exchanges, as they try to cut costs, gain scale and become more efficient.
"This combination will establish OMX as the group's global platform, building on OMX's leading technology and strong brand to position it to become one of the fastest-growing major exchange networks in the world," said Borse Dubai chairman Essa Kazim.
The government-backed Dubai group, which owns the emirate's exchange, is hoping that its more attractive offer will appeal to Stockholm-based OMX as well as the chance to gain access to the growing economic might of the Gulf region.
"The board of OMX will consider the Borse Dubai offer as compared to the Nasdaq offer and will update shareholders in due course," the Swedish operator said.
If the takeover is approved, it would mark a second setback for the technology-dominated Nasdaq, after its failed $5.3bn to buy the London Stock Exchange earlier this year.
Following Borse Dubai's unsolicited approach on Friday, Nasdaq directors urged OMX shareholders to back their earlier offer, which has already been agreed by the OMX board.
The US exchange operator has been desperately seeking a European partner after its rival, the New York Stock Exchange, won control of pan-European exchange owner Euronext in March.
The $14.3bn deal created the first transatlantic stock market operator, and the world's largest.
Meetings are now expected to take place between the Dubai exchange and shareholders from OMX, as well as with the Swedish government, which holds a 6.6% stake in the exchange.