Macquarie goes hostile with 'derisory' bid

By THIS IS MONEY
Updated: 04:15 EST, 15 December 2005

AUSTRALIAN bank Macquarie went hostile today with its takeover campaign for the London Stock Exchange by tabling an offer worth £1.5bn.

Macquarie said its 580p-a-share offer represented 'attractive value' for the LSE because the value of the exchange had been inflated by the bid speculation.

The price has previously been rejected by the LSE board as 'derisory', but Macquarie said its decision to go hostile was taken after holding talks with shareholders of the exchange.

Macquarie, which has completed its examination of the LSE's books, did not expect its offer to cause any major competition concerns.

This is in contrast to previous takeover proposals from pan-European exchange Euronext and German rival Deutsche Boerse, which were conditionally cleared by the Competition Commission after an inquiry.

Macquarie, which has established MLX as its bid vehicle, said the LSE would continue to have its headquarters and be managed in London.

It assured customers that they would continue to be represented on the LSE board and it had no intention of introducing major hikes in prices for broker or information services.

Jim Craig, director of MLX and head of Macquarie Europe, said the offer was a full price even though the LSE board described it last week as 'derisory'.

He said: '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.'

Shares in the London Stock Exchange changed hands at 618p today as investors took the view that Macquarie would have to sweeten its bid to win control or Euronext may weigh in with a formal offer.

However, Mr Craig would not be drawn on whether the bank would be prepared to raise its bid if it failed to win the backing of shareholders.

Concerns among investors about potential corporate governance issues led Macquarie to commit itself to ensuring that the LSE board will continue to have a majority of independent non-executive directors if it takes over.