Brierley attacks Stock Exchange merger terms

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The Independent Online

Sir Ron Brierley, the New Zealand corporate raider who chairs Guinness Peat, the City fund management group, has written to Don Cruickshank, the London Stock Exchange chairman attacking the terms of the iX merger.

Sir Ron Brierley, the New Zealand corporate raider who chairs Guinness Peat, the City fund management group, has written to Don Cruickshank, the London Stock Exchange chairman attacking the terms of the iX merger.

In his letter, which was made public yesterday, Sir Ron has demanded that the exchange pay its members a £10 special dividend - or £298m in total - to compensate for the £267m of cash and property on the stock exchange's balance sheet before the merger with the Frankfurt exchange goes ahead.

"We strongly object to the terms on which it is proposed to hand effective control to Deutsche Börse Newco," he wrote, adding: "It is painfully clear that LSE shareholders are getting the worse of the deal ... How this can be described as a merger of equals is beyond comprehension."

Sir Ron says that Guinness Peat, which owns 250,000 shares or 0.8 per cent, will be voting against the merger at the 14 September shareholders meeting and is urging other shareholders to follow suit. Market sources said that Sir Ron had been in the market to buy 100,000 shares on top of the 150,000 Guinness Peat received as a stock exchange member.

LSE shares jumped from £19 to £21.25 late yesterday afternoon.

Mr Cruickshank dismissed Sir Ron's attack saying that issues he raised were not new. "In analysing the merger of equals Sir Ronald has looked at only one dimension of the deal. His analysis fails to take in account the prospects of the different business components - in particular that Deutsche Börse has a successful derivatives business and a highly marketable technology services business."

Yesterday's spat came amid signs of hardening opposition to the deal among smaller brokers. There were calls yesterday for Brian Winterflood, leading smaller companies broker, to be given a seat on the board of the combined iX exchange as a way of defending the interests of smaller company brokers.

Charles Peel of Peel Hunt, who has openly called next month's shareholder vote to be delayed for three months, said yesterday: "Brian Winterflood should go on the board. He does represent the smaller cap end of the market that is outside the committee clique."

The idea is one of several to be discussed when the informal grouping of small brokers that has coalesced around Mr Winterflood meets next week. In the information memorandum sent to members last month, it stated that the board of the combined exchange is to have two independent members. These have not yet been chosen.

Several of the brokers involved in this iX ginger group have now met Mr Cruickshank but say they are far from satisfied with the answers they are getting on issues such as the scope of the involvement of Nasdaq, the US technology market in iX, and settlement and clearing.

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