Australia's Macquarie Bank has launched a formal 580 pence per share bid for the London Stock Exchange (LSE) - a price that the UK market operator has already dismissed as 'derisory'.
The offer values the LSE at £1.5bn and was made in a statement released just hours before a 'put up or shut up' deadline set by the UK's Takeover Panel.
The LSE rejected Macquarie's 580-pence-per-share proposal last week, saying the price "fundamentally undervalues the company and lacks any strategic or commercial credibility".
But Macquarie, which has formed a bid vehicle called MLX for the offer, says it believes the bid "represents attractive value for LSE shareholders given the substantial speculation that continues to support the LSE share price".
The offer is 23.4 times LSE's earnings per share before exceptional items and goodwill for the year ended 31 March 2005. But it falls short of the LSE's recent share price high of 620 pence.
LSE stock has risen more than 70% since September last year on the back of growing speculation about the exchange's future.
But the stock fell 1.4% to 613.50 pence following Macquarie's formal bid.
In its statement, the bank says it "regrets that the board of the LSE has refused to engage in substantive discussions despite the terms proposed" but argues that it could provide a "stable and focused future for the LSE".
Macquarie says if its bid was successful the LSE would continue to be headquartered and managed in London and regulated by the UK's Financial Services Authority. The bank also promised not to introduce any major price increases for broker or information services.
Furthermore, Macquarie says its bid also avoids the potential commercial conflicts of interest consequent upon ownership of the LSE by another European stock exchange.
Commenting on the offer, Jim Craig, director, MLX and head of Macquarie Europe, says: "MLX considers that its offer for the LSE represents attractive value for LSE Shareholders. MLX will be a committed owner of the LSE and will provide access to the expertise necessary to develop the LSE to its full potential for the benefit of stakeholders."
The Macquarie bid trumps the 530 pence-per-share offer made by Deutsche Börse in December last year. The German exchange eventually withdrew its £1.35bn offer following pressure from its shareholders.
The LSE has also been in negotiations for the past year with pan-European exchange Euronext, which has yet to disclose the price it is willing to pay for the UK stock market operator.
Both Deutsche Börse and Euronext were cleared by the UK's Competition Commission to bid for the LSE on condition that they ensure that any future clearing provider remains independent.
The LSE has rejected Maquarie's bid, repeating that the offer is "derisory" and undervalues the company.
In a statement, the UK exchange says the offer "is at a discount to the LSE's standalone value before any takeover premium" and disregards the quality and strength of the business.
The LSE says it believes that the Macquarie offer has been set at a level that will help Macquarie maintain its own and its funds' performance and reflects the absence of synergies and its attempt to assuage customer concerns.