Euronext pulls out of LSE takeover

French stock market operator Euronext was today said to have ruled itself out of the running for the London Stock Exchange because the price has risen too high.

Takeover interest in LSE has seen shares in the company leap from around the 450p mark in April last year to a closing price of 668.5p on Friday.

According to the Financial Mail on Sunday, the soaring price has sent LSE too high for Euronext with any consolidation in the European markets more likely to involve the French firm and Deutsche Borse.

It is the latest development in the long-running takeover saga surrounding LSE.

Last week it accused Australian bank Macquarie of trying to buy it “on the cheap” as it again rejected a £1.5bn (€2.1bn) hostile bid.

LSE branded the 580p a share offer “derisory” and said the price “ignored the quality and strength” of the business. The rejection came just hours after Macquarie posted full details of its bid to LSE shareholders, claiming the offer was “attractive, certain and deliverable in cash”.

Macquarie has complained that the value of the exchange has been inflated by ongoing takeover speculation. The Australians said its offer was at a 67% premium on LSE’s share price before the markets got wind that it was interested. It also said it was a “competitive valuation” compared with other recent transactions in the exchange sector.

Euronext was today said to be of the same opinion with sources telling the Financial Mail on Sunday that it was no longer interested.

Deutsche Borse triggered the takeover battle for LSE when it considered an offer of 530p a share more than a year ago. But shareholders in the Frankfurt-based exchange defeated its attempts to buy LSE because they thought a bid would destroy its value.

It is thought that Euronext investors may take the same view, while talks between Euronext and Deutsche Borse are understood to have been underway for months.

Some analysts suggest that LSE shares will rise beyond 750p and Macquarie will have to up its bid by £1 (€1.46) a share – adding £250m (€365m) to the price.