City Index mulling fresh offer for spread-betting rival IFX

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The Independent Online

City Index, the spread-betting group owned by Michael Spencer, is considering a takeover offer for its rival IFX after seeing a bid rejected last month.

IFX shares have gained strongly recently, prompting authorities to request that City Index make its intentions known. City Index said yesterday it had made an approach to IFX on 23 March and "this initial approach was rejected. [We are] evaluating whether or not to make a further approach."

It is not known how much City Index offered, but any new approach would have to be well in excess of £50m to interest the board. Yesterday IFX shares put on 4p to close at 160p, valuing the business at £46m.

IFX insiders were somewhat annoyed that the takeover approach had to be disclosed, claiming the share price rise is recognition of its strength as a business, rather than bid speculation. A spokesman declined to comment on whether IFX would be interested in talking if City Index does return. "The ball is in their court. It is not a live issue and we are not in discussions now," he said.

IFX was founded in 1933 and has had a stock-market listing since 1965. One possible source of instability is the impending departure of Edmond Warner, who recently announced he would quit the company once a successor is found.

A note from the broker Panmure Gordon remarked: "The identity of the new chief executive is clearly important for future performance".

IFX has hired headhunters to find a replacement. Mr Warner has been at the helm of IFX since June 2003. The spread-betting group made profits of £3.7m in the year to March, up from £1.7m in the previous 12 months.

City Index, majority owned by Mr Spencer, a leading City figure and Conservative Party grandee, looks after customer funds of £150m.

Last week Mr Spencer's heavyweight trading house, Icap, paid £455m in cash and shares for EBS, a foreign exchange and commodities dealer. Mr Spencer is thought to be worth at least £700m.