LSE eyes up french merger

The London Stock Exchange was today said to be eyeing a possible merger with Paris-based rival Euronext.

The Sunday Telegraph said LSE chief executive Clara Furse was considering reopening merger talks with the pan-European exchange operator as an alternative to the £2.43bn (€3.5bn) takeover proposal tabled by Nasdaq.

Shares in LSE leapt more than 30% last week to 1170p in anticipation of a bidding war after LSE rejected the 950p a share offer from United States exchange Nasdaq.

The Nasdaq bid followed earlier approaches from European rivals Deutsche Borse and Euronext as well as from Australian investment bank Macquarie more recently.

Mrs Furse rejected them all but was today said to be looking at fresh talks with Euronext as she came under pressure to reveal her strategy for LSE.

The potential move comes in spite of renewed merger talks between Euronext and Deutsche Borse, which were confirmed by both sides last week.

LSE is said to have maintained dialogue with Euronext over the past 12 months while the Competition Commission investigated potential problems with a tie-up.

According to the Sunday Telegraph, they have reached an informal agreement about how a merger could be structured.

The report added that a deal with OMX, the tiny Scandinavian exchange operator, was another possibility being considered by the LSE board and its advisers.

And the City continues to speculate that LSE could attract a further bid from Nasdaq while the New York Stock Exchange has also been linked with an approach.

Interest in LSE has seen its share price rise from less than 350p 18 months ago. It is now worth just under £3bn (€4.4bn).

But LSE has stood firm throughout the takeover process and insisted each offer was too low. It recently said it would return £510m (€743m) to shareholders and increased its dividend payment by 7% in its attempt to highlight its value to investors.