ICE may bid for LSE, thwarting German exchange

The London Stock Exchange and Deutsche Boerse last week announced plans to combine and create a global player worth at least £20 billion (S$39 billion).
The London Stock Exchange and Deutsche Boerse last week announced plans to combine and create a global player worth at least £20 billion (S$39 billion).PHOTO: REUTERS

LONDON • Exchange and clearing house operator Intercontinental Exchange (ICE) yesterday said it was considering making an offer for the London Stock Exchange (LSE), a move that could derail Deutsche Boerse's potential tie-up with the British company.

ICE said it had not yet approached the board of LSE and no decision has been made as to whether to pursue such an offer.

While the Atlanta-based company is aware it may face political and corporate pushback if it tries to break up the European marriage, it feels that LSE shareholders can be persuaded by a higher offer, people familiar with the matter said.

At the least, a counterbid could force Deutsche Boerse to increase its bid, one of the people said.

CME Group is also working with advisers to assess whether it could challenge the deal, separate people familiar with the matter said.

While a counterbid for LSE is the most likely option that CME is studying, talks are at an early stage and the Chicago-based exchange may choose not to proceed, they said.

ICE is unlikely to make a move before the March 22 British takeover deadline for Deutsche Boerse to make a formal offer for LSE, one of the people said. No final decision has been made and ICE could decide against proceeding with a bid.

Representatives for LSE, Morgan Stanley and CME declined to comment. A representative for Deutsche Boerse did not respond to requests for comment.

The exchange business is rife with acquisitions. ICE, led by chief executive officer Jeff Sprecher, became a global powerhouse in part through its dealmaking, such as the 2013 acquisition of NYSE Euronext, which gave it a derivatives business called Liffe.

Last October, Mr Sprecher expanded its data services business with the US$5.2 billion (S$7.3 billion) purchase of Interactive Data.

ICE also is no stranger to unsolicited offers for competitors. In 2007, the Chicago Mercantile Exchange prevailed in its quest to buy the Chicago Board of Trade (CBOT) over an unsolicited US$11.8 billion offer from ICE. Ms Kelly Loeffler, an ICE executive and Mr Sprecher's wife, paid a bellboy at the Boca Raton Resort & Club to slip the CBOT proposal under the doors of Mr Charles Carey and Mr Bernard Dan, the chairman and CEO of CBOT, a person in the know said. The ICE counter-offer forced the Chicago Merc to improve its bid three times.

Deutsche Boerse and LSE last week announced plans to combine and create a global player worth at least £20 billion (S$39 billion), which could better compete with ICE as well as CME Group, the world's largest derivatives market.

A German-British merger would also give customers a one-stop shop for primary markets in London, Frankfurt and Milan, as well as access to a pan-European stock venue called Turquoise. The deal would also gather the Euro Stoxx 50 Index, the most valuable equity benchmark in Europe, and FTSE Russell's portfolio of indexes under the same roof.

BLOOMBERG, REUTERS

A version of this article appeared in the print edition of The Straits Times on March 02, 2016, with the headline 'ICE may bid for LSE, thwarting German exchange'. Print Edition | Subscribe