The Clearstream board has recommended that Cedel enters exclusive negotiations with Deutsche Borse for an approved buy-out of its 50% stake in the settlement agency.
The board decision follows a meeting in Luxembourg late Friday and effectively clears the way for a full-scale takeover of Clearstream by Deutsche Borse. The recommendation to part-owner Cedel that it engages in exclusive negotiations with the Frankfurt exchange on an "appropriate price and other transaction parameters" is unambiguous.
Clearstream's decision comes after Deutsche Borse chief Wener Seifert warned that he would block any attempt to sell the business to bid rival Clearstream. It follows weeks of speculation about the likely outcome of the two-way tussle for control of Clearstream, culminating late last week in rumours that Cedel was preparing to reject both bids as too low. Deutsche Borse's initial valuation on Clearstream was understood to be in the region of EUR2.2 billion in cash, well below the EUR3 billion bid trigger Cedel had in mind. Euroclear, which had initially offered EUR2.4 billion, indicated that it was prepared to lift its bid to EUR2.6 billion ahead of Friday's meeting.
The outcome of the battle was viewed as critically important to the future of clearing and settlement in Europe, with a merger between Euroclear and Clearstream favoured by neutrals as the most likely to lead to the creation of a truly independent European clearing house. Takeover by Deutsche Borse raises the prospect of further vertical consolidation between national exchanges and depositories.