LSE rejects 'derisory' Macquarie bid

Australian bank Macquarie went hostile today with a £1.5bn (€2.2bn) takeover bid for the London Stock Exchange that its target has already rejected as “derisory”.

Macquarie, whose UK investments range from BBC Broadcast to the M6 Toll Road, put an offer worth 580p a share on the table just hours before a deadline set by the Takeover Panel expired.

The move turns up the pressure on the LSE board, which last week adopted an aggressive stance against Macquarie’s plans, claiming they lacked any strategic or commercial credibility.

Analysts said it may also flush out bids from the likes of Paris-based exchange Euronext or German rival Deutsche Boerse, which have shown an interest in the LSE in the past.

Macquarie said its offer was “full price” because the value of the exchange had been inflated by speculation since the news that it was considering an approach broke in August.

In contrast to Euronext and Deutsche Boerse, Macquarie said its bid would not be dogged by competition concerns and LSE investors would receive cash for their shares.

Analysts said the bid by Macquarie was unlikely to be successful at the current level as shares in the LSE were changing hands in the market at 618p and there was currently little chance of a recommendation from the LSE board.

But stockbroker Killik & Co said Macquarie was handling its position skilfully: “It retains the option to increase its bid if desired, and gains further time to attempt to win over the exchange’s customers and potentially find a bidding partner that can provide operational synergies.”

Macquarie, which has established MLX as its bid vehicle, said its decision to go hostile was taken after holding talks with shareholders of the exchange.

Customers were assured that Macquarie was a long-term investor and it was not planning to sweat the exchange for cash by hiking prices for broker or information services.

Independent directors would continue to comprise the majority of the LSE board and the exchange would keep its headquarters in London, the bank added.

Jim Craig, director of MLX and head of Macquarie Europe, said: “Importantly our business plan does not depend on increasing charges and we have no intention of doing so.”

He would not be drawn on whether the bank would be prepared to raise its bid if it failed to win the backing of investors.

“What we’ve heard from shareholders is that a cash offer is an attractive thing, so based on those discussions we have had the encouragement to proceed,” Mr Craig said.

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.