Euronext in approach for LSE

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The Independent Online

The London Stock Exchange has been approached by its Paris-based rival Euronext about a possible counter bid to Deutsche Börse's approach.

The London Stock Exchange has been approached by its Paris-based rival Euronext about a possible counter bid to Deutsche Börse's approach.

Euronext is understood to have phoned the LSE on Thursday to say it was "very interested" in pursuing discussions. A source said: "They've made an early approach to say they're interested in talking. There have been no formal, sit-down talks but people were on the phone." Euronext's chief executive, Jean-Francois Theodore, was in London this week. The company hired the investment banks Morgan Stanley and ABN Amro as advisers yesterday.

A move by Euronext, which runs stock markets in Paris, Brussels, Amsterdam and Lisbon, had been widely expected after Deutsche Börse proposed a 530p-a-share bid for the London market on Monday, a premium of 23 per cent to the previous Friday's closing price of 430p. The proposal valued the company at £1.35bn. The LSE rebuffed it, saying it was too low and could be blocked on competition grounds, but agreed to hold talks. Market sources said yesterday that Euronext may be prepared to mount a "white knight bid" of 600p a share.

Werner Seifert, the chief executive of Deutsche Börse, and his counterpart at the LSE, Clara Furse, met on Wednesday. Mr Seifert described the meeting as "very amicable, very professional, constructive" and stressed that he was not pursuing a hostile bid. "We are prepared to take as much time as necessary to get an agreed deal with the London Stock Exchange," he said in an interview. The move followed a failed merger between the Frankfurt and London exchanges in 2000, which was scuppered by opposition from LSE shareholders.

The vertically integrated structure of Deutsche Börse, which owns a clearing and settlement business, could be a major stumbling block as LSE customers fear it gives it too much pricing power. The German exchange sought to reassure users by pledging to honour the LSE's existing clearing and settlement arrangements and by offering tariff reductions for electronic order book trading.

Shares in the LSE rose 0.75p to 556p yesterday while Euronext stock was up 44 cents at €22.44 and Deutsche Börse shares made a gain of 45 cents to €44.15.

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