PARIS/LONDON, Dec 16: The London Stock Exchange’s two biggest shareholders rejected a 1.5 billion pound ($2.65 billion) offer from Macquarie Bank on Friday amid reports that rival suitors Deutsche Boerse and Euronext may choose to merge between themselves rather than pursue the LSE.
Thread needle Asset Management and Scottish Widows, respectively the largest and second-largest investors in the LSE, both said Macquarie’s 580-pence-a-share bid undervalued the operator of Europe’s biggest equity market.
Thread needle Asset Management has invested in the LSE because of its unique brand and strategic position, its strong cash flows and its future growth potential. The (Macquarie) offer fails to reflect these factors, Thread needle said.
Late last week, Thread needle bought shares in the exchange at 615 pence — 35 pence higher than Macquarie’s bidding price.
The LSE rejected the Australian bank’s offer as “wholly inadequate” on Thursday.
Trading in Macquarie shares on the Sydney stock exchange was volatile as investors wagered that the bank’s consortium would have to raise its offer to win over LSE shareholders.
But shares in Deutsche Boerse and Euronext both rose after French newspaper Le Figaro said the German exchange had sent an informal merger proposal to its multinational rival last weekend.
Both exchanges began courting the LSE about a year ago.
LSE shares shed 0.3 per cent to 618 pence.
The reluctance of LSE suitors to match LSE’s price expectations, Macquarie’s offer, and rumours the New York Stock Exchange may also be drawn into a bid battle for the London bourse have made a Euronext bid less certain, analysts said.
Euronext Chief Executive Jean-Francois Theodore is in any case not expected to make a decision on Deutsche Boerse’s proposal before February, the deadline set by Britain’s Competition Commission to receive final proposals from Euronext and Deutsche Boerse to buy the LSE.
Talk of a Franco-German merger has swirled for the past six months. Newspaper reports have said the tie-up is backed by some Deutsche Boerse shareholders who are also investors in Euronext and who see more scope for synergies than with a Euronext-LSE deal.—Reuters
