Historic hostile bid for London's stock exchange

London Stock Exchange rejected Swedish offer on Friday

In this story: German help to counter bid Call to delay merger vote Swedish company surges on speculation RELATED STORIES, SITES

LONDON -- The world's first hostile takeover bid for a stock exchange is gathering pace with Sweden's OM Group preparing to reveal more details on its offer for the London Stock Exchange (LSE).

The company is set to make a direct appeal to LSE shareholders this week after the London bourse rejected a friendly offer on Friday.

The LSE is attempting to merge with the German stock exchange operator Deutsche Boerse AG.

On Monday morning OM Group, which runs Stockholm's exchange, had not revealed any details of its offer to LSE shareholders.

The company's spokeswoman Anna Eriksson told the Swedish news agency Direkt: "We haven't placed a formal bid. Information about the bid level stems from a press statement from the London bourse."

Swedish television reported on Monday that further information could be expected during the day but Ericsson declined to confirm or deny the report. "There will be something this week," she said.

Deutsche Boerse said on Saturday it would be willing to support the LSE in countering any takeover bid from OM Group if the LSE and its members so desired.

"If the Swedish bourse presents a hostile takeover bid, Deutsche Boerse would be prepared to change its merger plans in collaboration with the LSE with a view to preventing the takeover," Deutsche Boerse spokesman Walter Allwicher said.

Deutsche Boerse said it backed the LSE's decision to reject the £800 million ($1.18 billion) Swedish offer on Friday.

The LSE had said that its shareholders and customers would not reap benefits similar to what they would achieve by merging with the Germans to form a new operating company, iX.

Allwicher said Germany's exchange agreed. "A merger of Deutsche Boerse and the London Stock Exchange would yield greater value for shareholders and be of more use to customers," he said.

The proposal to merge the London and Frankfurt exchanges is due to be voted on by LSE shareholders on September 14 and analysts have said the result would be a close call.

Britain's Association of Private Client Investment Managers and Stockbrokers (APCIMS), a stockbrokers' body, said the LSE should delay its shareholder vote on the merger.

"This (new bid) reinforces the need for a delay in the vote so that the shareholders can decide the best way forward for the London Stock Exchange," Angela Knight, APCIMS chief executive, said.

Knight said that the LSE should now publicise details of a third offer that it had received from a consortium led by the Paris Bourse.

APCIMS did not elaborate on the French offer but industry sources told Reuters news agency that the Paris stock exchange had approached the LSE with a merger plan similar to the LSE-Deutsche Boerse model.

Since the beginning of the year, optimism over pan-European share trading has led to a surge in the share price of OM Group.

The company's shares closed at 418 Swedish crowns ($44.89) on Friday, up 3.50 crowns ($0.38).

In Friday's friendly offer, OM Group offered £20 ($29.50) in new OM shares and £7 in cash for each LSE share.

The last traded price for the LSE share was £23.50 ($34.64) at the close of business on Friday.

A combination of OM and LSE would have created a group valued at more than $4.8 billion with LSE shareholders owning around 25 percent of the combined group.

"For our shareholders, the offer value is derisory," LSE chairman Don Cruickshank said in a statement.

OM's Chief Executive Per Larsson said: "The reaction of the board of LSE is wholly predictable. We are determined that the London market should have a better alternative to the flawed iX proposals."

OM currently only trades in five percent of the Eurotop 300 shares by weighted market capitalisation.

LSE's and Deutsche Boerse's equity markets interests amount to 34 percent and 12 percent respectively.

Reuters contributed to this report.

London, Frankfurt reject hostile Swedish offer for LSE
Aug. 26, 2000
European bourses merge
Mar. 20, 2000
Euro bourses talk merger
Mar. 15, 2000
London exchange sets vote on demutualization
Feb. 2, 2000

London Stock Exchange
Stockholm's OM Stock Exchange
Frankfurt's Deutsche Boerse
Paris Bourse
Association of Private Client Investment Management and Stockbrokers

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