Australia celebrated the life of one of its greatest business figures last week, with a memorial concert for Kerry Packer. But even that great gambler wouldn't have liked the odds facing his compatriots at Macquarie Bank in their bid for the London Stock Exchange.
The 580p-a-share bid is now 244p - or £622m - south of the LSE share price. On Friday, the Aussies have to decide whether to fight on or pull up stumps. Don't be surprised if they make a diplomatic withdrawal. In six months, when Macquarie can bid again, LSE shares may have slipped back towards the sub-£6 level they traded at last year.
The LSE wants no truck with these Aussies. It's not that it is against doing a deal - how could it be, given its talks with Deutsche Börse last year? It's just that Clara Furse and her crew think the game is European consolidation - and an Australian financial buyer isn't about to deliver that.
But the LSE is only half right. The European Commission is desperate to create a pan-European market in financial services. It has brought in MFID, a directive aimed at securities trading so hated that it brings some investment bankers out in hives. It will tell the retail banks off tomorrow for dragging their heels over the Single European Payment Area, which by 2010 should let you write a cheque in Madrid to pay a bill in Riga, without being charged for it. And it is pushing for pan-European financial mergers.
These are starting to happen. Santander bought Abbey; UniCredito bought HVB; ABN Amro bought Antonveneta in Italy, which paved the way for BNP Paribas to buy BNL 10 days ago; and there is talk of Spain's BBVA buying Lloyds TSB. Deutsche Börse has been in merger talks with Euronext, which itself may yet come back with a bid for the LSE.
Can British financial services companies play a leading role in all this? It's tricky. Our institutional shareholders seem unwilling to back cross-border deals in Europe. Our banks have poor ratings. Our insurance companies lack capital. And the LSE - well, the LSE's shares are high because of a mix of bid premium and massive cash payouts. If it were to use this currency to go out and buy something, it would quickly devalue.
Macquarie has said buying the LSE would not be the end of its European securities trading ambitions. If you want a British champion in Europe, maybe you need an Aussie backing you.
No sale at the 'Mail'
Ladies and gentlemen, let us leave the world of 21st-century investment and journey into the past. Daily Mail & General Trust has no truck with modern corporate governance, still has a two-tier share structure that allows the Rothermere family to have control with a minority stake, and runs its newspapers with pre-Wapping staffing levels.
On Friday, the market took fright at DMGT's decision not to sell its regional newspaper business, Northcliffe. There were rumours that all was not well with the owner of the Llanelli Star, Potteries Advertiser and Magyar Bazar. DMGT maintained that it put the papers up for sale to see what bids it would get and had simply found the bids were not high enough.
But to make Northcliffe worth more to DMGT than it is worth to others, DMGT will need to take out more than the £30m of costs it has so far identified. The business has margins little more than half those of the likes of Johnson Press, which has cracked the problem of managing decline in the newspaper business.
But where will it end? DMGT has always overstaffed Associated Newspapers, arguing that its "editorial quality" has kept the Daily Mail and Mail on Sunday ahead of its rivals. But if DMGT is now focused on shareholder value, then surely it must do something about costs.
The drop of 14 per cent in DMGT's shares on Friday was the wrong reaction. In the long term, the Northcliffe debacle will make DMGT a more profitable company.