February 18, 2006	Saturday	Muharram 19, 1427

LONDON, Feb 17: The London Stock Exchange said on Friday that it will return 510.0 million pounds (745.0 million euros, $885.0 million) to shareholders as it hardens its defence against a takeover bid from Australian investment bank Macquarie.

The London exchange said it was more than doubling its cash return programme from a previously-announced 250.0 million pounds, while also revealing a rolling programme of share buybacks of up to 50.0 million pounds per year.

In reaction, the LSE’s share price surged 5.58 per cent to 804 pence, while London’s FTSE 250 rose 0.18 per cent to 9,385.30 points. The group lists on the second tier of the British stock market.

Friday’s news came as the head of Germany’s Deutsche Boerse called for a solution to the need for further consolidation of European stock markets.

The LSE, the biggest equity market in Europe, said meanwhile that it would pay a full-year dividend of 12.0 pence per share in 2006, a 71-per cent increase on the previous year, and would cut 10 million pounds in costs by 2008.

Our continued strong trading performance is delivering excellent financial results, which enables us to announce an increased capital return and significantly increased dividend, LSE chairman Chris Gibson-Smith said in a circular to shareholders.

Macquarie’s offer recognises none of this. It provides no value today and reflects no value tomorrow. Shareholders should continue to reject the offer.

Earlier this week, Macquarie extended its hostile 580-pence-per-share offer until February 28. The group said last month that it had received acceptances for just 0.4 per cent of the LSE’s shares.

Bridgewell Securities analyst Katrina Preston said that the cash return programme, equivalent to about 230-pence-per-share, puts Macquarie under added pressure to increase its bid.

No one’s in any doubt that if Macquarie wants to be in with a chance it has to raise its offer, Preston said.

The London Stock Exchange has repeatedly rebuffed the offer which values it at 1.5 billion pounds (2.2-billion-euros, $2.6-billion).

Under British takeover rules, Macquarie has until the end of next week to come back with an improved offer.

The Australian group launched its takeover bid on December 15 last year.

The LSE’s share price has consistently remained above the offer price since then, supported by the group’s robust trading performance, and by expectations that a higher bid may emerge.—Afp