London Stock Exchange sale: Americans gatecrash Deutsche Börse takeover

New York Stock Exchange owner gatecrashes Deutsche Börse deal with audacious counter offer

Last Thursday, sterling cracked the $1.30 mark for the first time in almost eight months (Getty)

A transatlantic battle to buy the London Stock Exchange has burst into life after the owner of the New York Stock Exchange gatecrashed a takeover by Deutsche Börse with an audacious counter offer for the British group.

The Atlanta-based Intercontinental Exchange (ICE) confirmed it was considering a possible offer for the London Stock Exchange (LSE) Group, setting up a potential American v German bid war for the FTSE 100 giant.

ICE, which also owns London’s Liffe futures exchange, has not approached the company’s board to discuss a takeover and has not yet decided whether to pursue an approach. Shareholders gave a thumbs-down to ICE’s plan by bailing out of the New York listed group. The shares fell 3.7 per cent initially.

Markets had been on the alert for an American counter-bid. An LSE-Deutsche Börse tie-up would create a European champion to rival the dominance of the US exchanges.

LSE, led by chief executive Xavier Rolet, said it had received no approach but talks with the Germans were ongoing. The shares climbed to an all-time high, adding 7.2 per cent. Deutsche Börse shares rose 1.09 per cent.

ICE’s approach is likely to put further pressure on the LSE-Deutsche Börse proposal, which was unveiled last week as a $28bn (£20.01bn) all-share merger. Under takeover rules, the two sides have until 22 March to agree a deal. ICE is reportedly waiting until after that time to swoop with a possible counter offer, and has until 29 March to make a firm offer if it decides to bid.

ICE – led by Jeff Sprecher, who helped engineer the group’s takeover of NYSE Euronext in 2013 – is working with investment bankers at Morgan Stanley and Moelis to map out its attack.

Bloomberg reported that CME Group, which owns the Chicago Mercantile Exchange, is also working on a counterbid for LSE.

The emergence of a US rival will spark speculation that the race for LSE will trigger a cash war between suitors vying for the group, as they try to steal a march on each other.

“For shareholders, [ICE’s move] is very good, but it’s difficult at this stage to form an opinion due to the lack of information about the deals,” said Numis analyst Jonathan Goslin. “The shares have bounced quite a lot, but it’s guesswork so far.”

A tie-up between LSE and Deutsche Börse, two national champions, has already attracted political attention in the EU after France’s economy minister, Emmanuel Macron, said the deal could pose competition issues. The prospect of a possible British exit from the EU is also likely to play a role in talks.

Under the deal, the combined company would be listed and domiciled in the UK with head offices in London in Frankfurt. It is the third time the two exchanges have tried to get hitched, after previous attempts foundered due to rival bids. A deal in 2005 hit the buffers after Swedish exchange OMX made a hostile bid for LSE. Citi analysts said there was a “real danger” this could happen again. “We do not believe Deutsche Börse wants to find itself in a bidding war with a rival exchange, let alone ICE or even CME,” they argued. “Its balance sheet is stretched already… a revision to its offer would see either a higher proportion of the combined entity go to LSE shareholders, or it would involve an equity raising.”