Billabong founder cited in LSE bid

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The Independent Online

The Australian entrepreneur behind the Billabong surfwear label has emerged as a key player in Macquarie Bank's bid for the London Stock Exchange.

Matthew Perrin, the founder of Billabong, is named in documents detailing Macquarie's 580p-a-share bid for the LSE, launched formally yesterday.

The LSE dismissed the offer as "derisory"and major investors reckoned the £1.5bn bid was far too mean. The LSE snubbed an informal approach last week.

In a statement, the LSE said: "Macquarie's offer is at a discount to the LSE's stand-alone value before any takeover premium. The offer disregards the quality and strength of the LSE's business, its long-term growth prospects and the re-rating of the global exchange sector."

Scottish Widows Investment Partnership, the LSE's second-biggest investor with 7 per cent of the shares, agreed. David Kier, its UK investment director, said: "We are supportive of the management's decision to reject 580p per share, which doesn't encapsulate the full value of the LSE."

SWIP and Threadneedle command about 17 per cent of the LSE's shares. Both have paid more than 615p a share to top up their holdings in recent days, suggesting Macquarie must dig far deeper to land the Exchange. LSE shares eased 2p to 620p.

Yesterday's offer, tabled just before a Takeover Panel deadline that forced Macquarie to bid or walk away for at least six months, is seen by the City as an opening shot rather than knockout blow. Andrew Mitchell, an analyst at Fox-Pitt Kelton, said: "This is not a winning bid. LSE shareholders would probably prefer to stick with the LSE as an independent company rather than accept this bid." A major LSE investor said: "This keeps Macquarie in the game. It shows intent, that they are serious."

The bank also signalled it was only a beginning. Jim Craig, the head of its European operations, said LSE shareholders "would not be doing their jobs" if they did not at least look for a higher price. "It's the beginning of the process," Mr Craig said. "It's day one." But he insisted Macquarie had offered a fair price and stressed Macquarie's offer was the only one on the table. Euronext, based in Paris, is also interested, but has been stymied for the time being by European competition worries. Mr Craig said: "This is a generous offer. This is cash, certain and deliverable. This is ... a very serious offer."

After nine real or rumoured approaches since 2000, Mr Craig reckoned a Macquarie takeover would provide stability and an end to uncertainty for LSE investors and customers. The LSE headquarters would remain in London and its management would be asked to stay. The bank has no intention of raising prices, Mr Craig said.

The clock is now ticking for Macquarie. Under Takeover Panel rules, it has 28 days to publish a formal offer document and 60 days thereafter in which to win approval from a majority of the LSE investors. Clara Furse, the LSE chief executive, is expected to resume talks with the Swedish exchange OMX should the Australian offer fail.

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