The London Stock Exchange (LSE) has accused Macquarie Bank of trying to buy it "on the cheap" and has rejected the Australian firm's takeover bid for the second time.
In a statement released after Macquarie published its bid document for the LSE, the UK exchange describes the 580p-a-share offer is "a blatant attempt to acquire the exchange on the cheap" and says the bid "ignores the quality and strength" of the business and its long-term growth prospects.
In its offer document, Macquarie says its £1.5bn bid for the LSE was an "attractive, certain and deliverable cash offer". Macquarie also argues that its bid is the only offer available to LSE shareholders today.
In the 223-page document, Macquaries stresses that it has no intention of increasing fees but claims that the UK exchange is "a fundamentally low growth business" and is "strategically isolated" following a number of failed expansion and consolidation attempts.
LSE shareholders have until 31 January to accept the cash bid, which was originally branded "derisory" by the UK exchange's board when it was first tabled in December.
The LSE says it will be writing to shareholders to explain in detail its reasons for rejecting the Macquarie offer and in the meantime, shareholders are strongly recommended to take no action.
The news comes as the LSE reports strong growth in the third quarter. The exchange says revenues rose to £80.9m for the third quarter ending 31 December 2005, up from from £62.5m in the same period the previous year.
Clara Furse, LSE CEO, says the performance "reinforces our dismissal of Macquarie's offer which entirely fails to recognise the value of the business and its unique position".
To ram home the point, the LSE's top shareholder Threadneedle Investments yesterday increased its stake in the exchange, taking its total holding to some 12.75% of the company’s equity.
Michael Taylor, head of equities at Threadneedle, comments: "The LSE's shares are very cheap on a standalone basis, bid or no bid. The focus on potential ownership structure has obscured a really underlying growth story."
LSE shares hit a new all time high of 670 pence following the strong trading update, valuing the UK market at £1.7bn and prompting speculation that any successful bid for the market operator would have to be considerably higher than the current offer.