London Stock Exchange rebuffs takeover bid

The London Stock Exchange today said it had knocked back a £1.35bn (€1.95bn) takeover approach from German rival Deutsche Borse.

The LSE said the 530p-a-share (766 cents) proposal undervalued both the company and potential savings from a tie-up with the Frankfurt-based exchange.

Concerns that a takeover would face competition and regulatory issues had also led LSE directors to reject the approach.

But the group said in a statement that it had agreed to hold talks with Deutsche Borse to see whether it could return with a “significantly improved” proposal.

The LSE has long been seen as a target of Deutsche Borse, which has a market value of around $6bn (€4.51bn), and the two companies were poised to merge four years ago.

At that time, the LSE was owned by its members who decided that a deal would not be in their interests.

The deal also foundered in the face of a hostile bid for the LSE from Stockholm Stock Exchange operator OM Group.

Competition concerns are based on the fact that Europe has three major exchanges – the LSE, Deutsche Borse and pan-European bourse Euronext.

A formal offer from Deutsche Borse could spark a bidding war if Euronext decided to throw its hat into the ring.

The LSE is thought to fear a drawn-out wrangle with the European Commission if it recommends an offer from Deutsche Borse, although it concluded four years ago that “on balance” a merger would be approved.

Shares in the LSE have risen 25% in recent weeks as investors anticipated a possible takeover bid and are likely to climb even higher today.

In a statement, LSE directors said they believed in “the company’s strong growth prospects as the largest equity market in Europe with a unique position in global capital markets”.

They added: “The board of LSE is fully committed to continuing to deliver value to shareholders and customers as an independent group.”