LSE highlights value with profits surge

Management at the London Stock Exchange stressed the takeover target was an “exceptionally valuable asset” today, as it banked bumper profits.

The LSE, which has rebuffed a number of bid approaches in the last two years, reported a 161% boost in pre-tax profits to £76.7m (€114,4m) for the six months to September 30.

The 300-year-old exchange, which is also Europe’s biggest, enjoyed a buoyant half year thanks to new listings and the growth in electronic trading.

Revenues jumped 20% to £163.3m (€243.5m), while the company also said the result had supported hopes of an “excellent result” for the full year.

Chief executive Clara Fuse said: “The exchange continues to produce faster order book volume growth than any other major cash or equity derivatives exchange in the western world.”

The US tech-based Nasdaq index has acquired a 25.1% stake in LSE over the past year, but failed in an earlier bid to take over the entire Square Mile-based organisation.

Chairman Chris Gibson-Smith said: “Our coveted global brand and our unique strategic position at the heart of the world’s capital market in London make us an exceptionally valuable asset. We are continuing to assess opportunities for further value accretion from this very strong base.”

There has been considerable interest in LSE for two years. Australian bank Macquarie has previously made an offer while the New York Stock Exchange and Euronext have also expressed an interest.

In September, talks were held with FTSE 100 Index-listed Icap, which specialises in electronic derivatives, fixed-income and other money-market broking, over a possible merger.

Discussions broke down as Icap chief executive Michael Spencer believed the exchange’s share price was too high after recent takeover speculation.

Daniel Garrod, an analyst at Citigroup, said: “The chairman reiterates the brand is an exceptionally valuable asset. To date, management has consistently stated that all takeover offers have significantly undervalued the franchise. We detect no change in this opinion.”

Analysts estimate the LSE could be worth as much as £3bn (€4.5bn).