LSE attacks Aussie bid

By NICK GOODWAY FOR MAILONLINE
Updated:

 

THE London Stock Exchange today roundly attacked the hostile £1.5bn takeover bid from Australia's Macquarie bank - saying it was trying to deprive shareholders of an opportunity to take part in the capital becoming the centre of the 'world's first global exchange business'.

It shot down Macquarie's 580p-a-share offer, providing a list of analysts' valuations, five out of six of which are above the bid price. LSE shares rose 7½p to 657½p, with one commentator saying: 'The market has already rejected this bid and is simply waiting to see what comes next.'

Clara Furse, chief executive of the LSE, said: 'Macquarie's opening shot of 580p is either plain woeful or disingenuous, and appears to demonstrate a complete misunderstanding of the global exchanges sector and our pivotal position in it.

'The sector is at the beginning of a transformational phase of corporate development. The LSE is the natural centre for the world's capital markets.'

Under takeover rules the LSE had to issue its first defence document within 14 days of the Macquarie offer being posted, and analysts said they were sure it was keeping its powder dry for later stages of the bid.

Nevertheless, the LSE attacked three of Macquarie's specific claims. It said the Australians had described the LSE as low growth because it does not own a derivatives business. But the LSE pointed out that in the last two years it has grown faster than either Euronext.liffe or Eurex.

Against Macquarie's claim that the LSE is overvalued, it provides a chart comparing its price-earnings multiple to those of the world's other leading exchanges.

The 580p bid gives a price-earnings ratio of just 18.2, while Deutsche Börse is on 22.7, Euronext on 23.1 and Nasdaq on 69.4. The average rating for the world's top dozen exchanges is 35 times earnings.

But Jim Craig, head of Macquarie Europe, said: 'The LSE has again avoided focusing on matters within its control, such as costs - pinning its hopes on cyclical equity and IPO market movements, and a vague belief in global exchange consolidation.' • A group of investment banks trading on Euronext in Paris is trying to put together a concert party to shape the outcome of any merger between it and German rival Deutsche Börse.

According to French business paper Les Echos, the banks, which together hold almost 10% of Euronext equity, believe any combination should be on a 50-50 basis between Euronext and the sharetrading business of DB, with DB settlement firm Clearstream hived off separately.

Talks aimed at a shareholder pact are under way between France's Crédit Agricole, BNP Paribas and Société Générale, Holland's Fortis and ABN Amro and Portugal's Banco Espirito Santo.

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