Frankfurt could lose out to City in Deutsche Boerse-LSE tie-up
LONDON: The London Stock Exchange faces a likely takeover war after Euronext joined the battle for the 200-year-old British institution yesterday with a takeover approach pitting it against Germany’s Deutsche Boerse.
Paris-based Euronext, which was formed in September 2000 by the merger of the exchanges of Amsterdam, Brussels and Paris, confirmed its interest just days after the LSE rejected a two-billion-euro offer from Deutsche Boerse.
In a brief statement, the LSE said: “The approach (from Euronext) is at an early stage and therefore does not require a response at this point.”
In Paris, Euronext confirmed it was in talks with the LSE with a view to starting preliminary discussions about a possible offer. “There can be no assurance at this stage that any offer will be made,” it said in a statement.
Reports have suggested the Euronext offer could be in excess of LSE’s closing price on Friday of 556 pence a share and that Euronext chief executive Jean-Francois Theodore would argue that the Euronext business model offered better synergies than could be expected with Deutsche Boerse.
“Euronext were never going to let Deutsche Boerse get this too easily because the fit is clearly better with Euronext, but it may well be that Deutsche Boerse has got a deeper pocket,” said Hilary Cook, director of strategy at Barclays Stockbrokers. “This is going to be an interesting battle and the LSE is clearly quite a jewel,” she said.
There is speculation that other potential bidders such as the New York Stock Exchange could emerge, as well as the possibility of a tie-up with the Nasdaq, the US electronic stock market.
Last week, Deutsche Boerse tabled a 530 pence-a-share offer for LSE, valuing the company at about £1.35 billion, but the LSE rejected the bid as too low.
Werner Seifert, the 55-year-old pipe-smoking jazz organist who heads the Frankfurt exchange, has not ruled out a possible move to London if the merger goes ahead. He is expected to hold futher talks with his Canada-born opposite at the LSE, Clara Furse, this week.
The German bid came more than four years after the failure of a planned merger between the Frankfurt and London known as the “iX” project. In 2000, it had been a rival bid for the LSE from OM Gruppen, which operates the Stockholm stock exchange, as well as shareholder concerns and technical and regulatory difficulties, that ultimately scuppered the “iX” project.
In a further humiliating defeat for the London exchange, in 2002 Euronext beat the LSE in a takeover battle for the London Liffe futures market. The same year it extended to include the Portuguese stock exchange.
The London Stock Exchange is one of the world’s oldest stock exchanges. It was formed over two centuries ago, but traces its history back more than 300 years in the coffee houses of 17th century London. More than 2,600 companies are listed on the LSE’s markets, and in its last financial year it handled more than 59 million trades, an average of 234,000 every day.
n FRANKFURT: As the takeover battle for the London Stock Exchange hotted up yesterday, fears were growing in Germany that Frankfurt could end up losing out to London’s City as a financial centre if Deutsche Boerse succeeded in buying the LSE.
In an interview in the weekly newsmagazine Der Spiegel yesterday, the head of German stock market operator Deutsche Boerse, Werner Seifert, said that the merged company could be based in London rather than in Frankfurt.
A move was “part of the negotiations”, Seifert said in an attempt to convince the reluctant British company of the virtues of a Anglo-German merger rather than a tie-up with Euronext, which comprises the Paris, Amsterdam, Brussels and Lisbon exchanges.
In Frankfurt, however, the prospects of the relocation of Deutsche Boerse’s headquarters has reawakened fears that the German financial capital would lose out to the City, not only in terms of prestige, but in jobs too.
Such concerns had been one of the main factors why Deutsche Boerse’s and the LSE’s ambitious “iX” merger project failed four years ago.
“The stock exchange’s secret plan — Werner Seifert wants to transfer Frankfurt’s pride and joy to London. That will jeopardise the financial centre as a whole,” the mass-circulation daily Bild wrote last week. – Agencies
Last update on: 21-12-2004