09 February 2016

Deutsche Börse still considering LSE merger

14 March 2005  |  6215 views  |  0 Deutsche Borse

Deutsche Börse has asked UK and German regulators to continue to examine its bid to buy the London Stock Exchange (LSE), despite dropping its £1.35bn proposal for the UK market operator last week.

The Frankfurt-based exchange withdrew its preliminary cash offer of 530 pence per share after failing to gain a recommendation for the proposal from the LSE. The Börse had also faced increasing opposition to its takeover plan for LSE from its shareholders who called for the exchange to drop the plan and buy back its own shares instead.

But the German exchange left the door open for a new bid for for the LSE, if its Paris-based rival Euronext or another third party makes an offer.

In today's statement, the German exchange says it has left its financing commitments in place and has asked the UK Office of Fair Trading and the German Federal Cartel Office to continue with the merger control investigation. But the Börse will only submit a bid if another third party were to disclose an offer for the UK exchange.

The Börse withdrawal last week left Pan-European exchange operator Euronext as the favourite to take over the London exchange. But according to press reports, Euronext now faces its own shareholder revolt to its plans to buy the LSE.

Christopher Hohn, managing partner of The Children's Investment Fund (TCI) - a London-based hedge fund which led the opposition for Deutsche Börse's bid for LSE - told reporters that the largest shareholders in the Paris-based Euronext group opposed it making an offer "materially above" 400 pence per LSE share.

TCI currently holds over five per cent of Deutsche Börse and is thought to hold between three and four per cent in Euronext.

According to a report in the FT, The London Stock Exchange will not consider any bid below 590 pence and 600 pence a share, raising the prospect that it could retain its independence.

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