London rebuffs Frankfurt bourse bid

13th December 2004, Comments 0 comments

13 December 2004 , LONDON - London Stock Exchange (LSE) rejected on Monday a nearly EUR 2 billion takeover bid by Frankfurt Stock Exchange company Deutsche Boerse, raising the prospects of a possible takeover battle for LSE. Both LSE and Deutsche Boerse said further talks would be held on what would be the second attempt, after a merger in 2000 fell through, to link the two exchanges. In Frankfurt, industry sources said it remained to be seen whether Deutsche Boerse would now come forward with an official

13 December 2004 

LONDON - London Stock Exchange (LSE) rejected on Monday a nearly EUR 2 billion takeover bid by Frankfurt Stock Exchange company Deutsche Boerse, raising the prospects of a possible takeover battle for LSE.

Both LSE and Deutsche Boerse said further talks would be held on what would be the second attempt, after a merger in 2000 fell through, to link the two exchanges.

In Frankfurt, industry sources said it remained to be seen whether Deutsche Boerse would now come forward with an official offer, a step which could open a bidding war for LSE if the Euronext exchange company also decided to enter into the fray.

Deutsche Boerse, LSE and Euronext - the company formed in the merger of the Amsterdam, Brussels and Paris exchanges - are the three largest stock exchange companies in Europe.

Deutsche Boerse offered 530 pence per LSE share, an offer which was 23 percent above the LSE closing price on 10 December.

The offer put the value of the London company at just under GBP 1.35 billion (EUR 1.96 billion), compared to the German company's estimated market worth of about USD six billion (EUR 4.5 billion).

In the wake of Monday's disclosures LSE shares shot up by more than 20 percent in early trading Monday to 528 pence, almost reaching the Deutsche Boerse offer.

LSE shares had already gained by some 20 percent in recent weeks as investors sensed an opportunity amid signs that Deutsche Boerse might be setting its sights on the London exchange company.

In a statement, LSE said it was rebuffing the offer because it "undervalues both the company and the substantial synergies" that could derive in a linkup between LSE and some other major exchange.

Both Deutsche Boerse and LSE said talks would be held to see whether a deal could be reached.

The LSE said it could consider a "significantly improved offer" from its Frankfurt-based rival.

There were also concerns that competition and regulatory authorities could object to a merger. LSE directors believed in "the company's strong growth prospects as the largest equity market in Europe with a unique position in global capital markets", it said.

The Frankfurt and London exchanges first mulled a merger in the year 2000 under a new name "iX", but those talks also collapsed. In that same year, plans for a merger of the German exchange with the Swiss exchange SWX also fell through.

In its statement, Deutsche Boerse said it would talk with the LSE so as to "demonstrate ... the full benefits of our proposal and our belief that such proposal can be successfully implemented".

The German company said that such a deal would be "in the best interest of shareholders and other stakeholders" and that it aimed "to preserve the existing market structures including established market models and existing trading currencies as well as the regulatory frameworks in both markets".

One result of a linkup between the Frankfurt and London exchanges would be a "material reduction in the current level of tariffs for electronic order book trading in Britain", Deutsche Boerse said.

DPA

Subject: German news

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