US giant ICE mulls bid for London Stock Exchange

Wednesday, 2 March 2016 00:00 - - {{hitsCtrl.values.hits}}

AFP: US-based global markets operator Intercontinental Exchange (ICE) mulled Tuesday a bid for the London Stock Exchange Group, muscling in on merger talks with Germany’s Deutsche Boerse.

ICE, which owns the New York Stock Exchange, said in a statement that it was “considering making an offer for LSEG”, which owns the London and Milan stock exchanges.

The US group however gave no indication of price and now has until March 29 to launch a formal bid under British takeover rules.

The news sent LSEG’s share price rocketing to a record high on hopes of a bidding war.

“No approach has been made to the board of LSEG, and no decision has yet been made as to whether to pursue such an offer,” said ICE, which already owns the London-based Liffe derivatives market.

In a brief response, LSEG noted the announcement and confirmed no bid had been received.

“A bidding war may be in the offing now and we can likely expect some choppy price action between now and March 22 -- the deadline for Deutsche Boerse to submit a formal offer for the LSEG,” said analyst Brenda Kelly at traders London Capital Group.

She added that Deutsche Boerse “may now be forced (to) up its own offer, which has been described as a nil-premium merger”.

Last Wednesday, the LSEG revealed it was in merger talks with Deutsche Boerse, which manages the Frankfurt stock exchange.

Deutsche Boerse shareholders would however end up with 54.4 percent of the new holding company’s capital, while LSE investors would have 45.6 percent.

“Further to the announcement on 26 February 2016, discussions between LSEG and Deutsche Boerse AG regarding the potential merger of equals between the two groups continue to progress,” the LSEG added on Tuesday.

Should the pair merge, an enlarged group would be based in London and headed by Deutsche Boerse chief executive Carsten Kengeter.

Both the London and Frankfurt financial markets would continue doing business under their respective current brand names.

The tie-up plans constitute the third attempt at merging Europe’s two biggest markets but it comes at a politically sensitive time as Britain is due to hold a referendum on June 23 which would determine whether it remains in the EU.

Deutsche Boerse had previously sought to link up with NYSE Euronext, but that move was blocked by the EU Commission in 2012 on competition grounds.

One year later, the ICE purchased NYSE Euronext but was not interested in its European activities.

Euronext was floated free of the ICE in 2014 and operates the Amsterdam, Brussels, Lisbon and Paris stock exchanges.