Bidding for the London Stock Exchange might soon heat up, with the owners of both the New York Stock Exchange and the Chicago Mercantile Exchange announcing interest in making offers for their British counterpart.
LSE had previously agreed to a £20 billion deal to merger with Deutsche Börse, which could be in jeopardy if the German company is outbid.
The Telegraph had the day’s news:
London Stock Exchange’s £20bn merger with Deutsche Börse could be gatecrashed by the owner of the New York Stock Exchange, after it confirmed it is considering making a counter bid for the group.
Shares in LSE soared to a record high of £29.14 this morning after Intercontinental Exchange (ICE), which operates global exchanges, clearing houses and data services, said it may make an offer.
However, it said it had not yet approached the LSE board, or made a decision about whether to pursue a possible offer.
“There can be no certainty that any offer will be made, nor as to the terms on which any offer will be made,” ICE said in a statement.
ICE has appointed Morgan Stanley to advise on a higher offer for the British group.
It is unlikely that ICE will make its move before a UK takeover deadline on March 22, Bloomberg reported.
Chad Bray of The New York Times explained how Deutsche Börse and ICE have long been competitors in the merger market:
The possibility of an offer for the London Stock Exchange came just over eight months after ICE, which is based in Atlanta, spun out Euronext, which operates stock exchanges across Europe, in an initial public offering in June. Euronext was acquired as part of an international push by the New York Stock Exchange in 2007, before ICE took over the two exchanges.
It also followed ICE agreeing to buy the Interactive Data Corporation, a big publisher of financial data, for about $5.2 billion in October.
Deutsche Börse itself tried to acquire the parent of the New York Stock Exchange before ICE, but it dropped those plans in 2012 after European antitrust regulators threatened to block the deal.
Later that year, IntercontinentalExchange agreed to buy NYSE Euronext for about $8.2 billion. The acquisition was approved by European regulators in November 2013.
On Friday, Deutsche Börse and the London Stock Exchange provided more details about their “merger of equals,” saying the combined company would most likely be based in London and be led by the German exchange’s top executive, Carsten Kengeter. Xavier Rolet would step down from his role as chief executive of the London Stock Exchange.
The London Stock Exchange-Deutsche Börse merger would create a giant in an industry that has rapidly consolidated. It would also allow London, which has served as a financial gateway to Europe, to maintain economic ties to the Continent, even as Britons are set to vote in June on whether to leave the European Union.
The companies have said any potential merger would not be conditioned on the outcome of the June 23 referendum, but a decision by Britain to leave the European Union could “well affect the volume or nature of the business conducted in the different financial centers served by the combined group.”
Ian Walker and Eyk Henning of The Wall Street Journal also noted that CME, the owner of the Chicago Mercantile Exchange, is also considering a bid:
CME, the operator of the Chicago Mercantile Exchange, is also considering an approach for LSE, according to a person familiar with the matter.
Shares in the LSE rose more than 7% in response to a potential bidding war for the company. Deutsche Börse traded 0.4% higher.
The news comes a week after the LSE said it was in advanced talks with Deutsche Börse about a so-called merger of equals that would value the combined company at about $28 billion based on their closing stock prices the day before the announcement.
LSE said it noted ICE’s announcement and confirmed it hasn’t received any proposal from the company, adding that talks with Deutsche Börse continue to progress. Deutsche Börse also said it noted ICE’s statement and would closely monitor future developments while talks with LSE continue.
While the CME hasn’t yet decided whether to proceed with a bid, it appears to have more financial firepower and fewer antitrust issues than ICE, the person familiar said.
The LSE remains committed to a friendly deal with Deutsche Börse but it would have to consider potential rival bids by ICE or CME, the person added.
A spokeswoman for CME declined to comment.
