Deutsche Börse has gone public with details of its £1.35bn bid for the London Stock Exchange in an attempt to win over disgruntled shareholders who have been calling for the German exchange to drop the deal, but the move prompted the LSE to repeat that the cash offer of 530 pence per share was too low.
An increasing number of Deutsche Börse shareholders have expressed concern at the exchange's proposed acquisition since the LSE first rejected the bid in December. Earlier this month TCI Fund Management, a London-based hedge fund which holds a five per cent stake in Deutsche Börse, called on the exchange to drop the plan and concentrate on buying back its own shares instead.
The Börse says its offer, which is subject to on the sole pre-condition of an "unqualified and unconditional" recommendation from the LSE board, would cut costs for market participants. Tariffs for electronic order book trading would be cut by 10% from January 2006, would remain those levels for five years and probably cut further in the future. The Börse also guaranteed that those fees would never exceed current levels.
The exchange would also offer an alternative to LCH.Clearnet at half the price, but also said it would honour agreements the LSE has with current clearing services providers. In information services, customers subscribing to a combined German and UK data package would receive a 10% discount.
The LSE maintains that Deutsche Börse's offer "does not recognise the inherent value" in its business, but says it is still willing to continue to hold discussions on an improved offer and that a combination with another major stock exchange "could be in the best interests of shareholders and customers".
Werner Seifert, chief executive, Deutsche Börse, told reporters that the exchange is willing to consider changes to the rejected offer but will also take its case to LSE shareholders and exchange users.
LSE is also in discussions with Euronext, which issued a statement today saying it will make a submission to the office of fair trading with respect to its possible offer for LSE "imminently", but the pan-European exchange operator did not disclose details of any bid it may make.
Deutsche Börse attempted to take over the LSE four years ago but the deal was scuppered by London shareholders - at the time LSE was owned by its members - and a hostile bid from Nordic stock exchange operator OM Group.