London Stock Exchange rejects 'derisory' bid

The London Stock Exchange today dismissed a £1.48bn (€2.2bn) takeover proposal from an Australian bank as derisory and lacking any commercial sense.

Directors of the LSE announced that they had rejected a 580p-a-share indicative offer from Macquarie Bank with less than a week to go until a deadline for a firm bid for the exchange expires.

In a statement, they said: “The board of London Stock Exchange rejects outright this derisory proposal which fundamentally undervalues the company and lacks any strategic or commercial credibility.”

The LSE is currently worth £1.57bn (€2.3bn) and analysts think it would take an offer in the region of £1.8bn (€2.7bn) to gain the support of the board.

Macquarie has complained that a frenzy of interest in the LSE surrounding a potential bid had driven its share price higher than it was prepared to pay. Details of its approach to the LSE emerged last night.

Directors of the LSE justified the rebuff on the strength of the half-year results announced by the LSE last month.

These results showed the LSE generated 15% more turnover between April and September than a year earlier, while operating profits rose 24% to £50.8m (€75.3m) before exceptional items were taken into account.

Shares in the LSE have also been supported by the exchange pledging to return £250m (€371m) to its shareholders once the offer period ends.

Macquarie had asked for information available to rival suitors Euronext and Deutsche Boerse as it pondered whether to make a cash offer, but it emerged today that this request was turned down the LSE.

German exchange Deutsche Boerse fired the gun on the takeover race for LSE a year ago when it tabled an offer of 530p a share, but it was rejected by the LSE as too low.