A major shareholder revolt at Deutsche Börse's annual meeting in May seems increasingly likely after Fidelity Investments added its voice to those of other dissident shareholders opposing its £1.3bn bid for the London Stock Exchange.
Fidelity, the world's largest mutual fund company, holds a stake of more than 4.5 per cent in Deutsche Börse.
Opposition to the bid is being led by the hedge funds The Children's Investment (TCI) trust, based in London, and Atticus Capital, based in New York, which between them hold more than 12 per cent of Deutsche Börse. The American fund management houses Capital International and Harris Associates have also indicated they are opposed to the bid.
Atticus has accused Deutsche Börse of "empire building". The two hedge funds have accused Deutsche Börse of ignoring their opposition and have threatened a vote to oust its supervisory board at its annual shareholder meeting on 25 May. Fidelity has also called for such a vote, sources say. TCI wants to call an earlier, extraordinary shareholder meeting, though under German rules the earliest it could take place would be about a week before the general meeting. A vote on the removal of Deutsche Börse's supervisory board requires a simple majority.
TCI had called for a vote on the LSE bid but under German law shareholders cannot vote on it. The rebel shareholders fear that Frankfurt would overpay for the LSE and want it to return cash to shareholders instead.
The LSE has twice rejected Deutsche Börse's indicative bid of 530p a share. Werner Seifert, Deutsche Börse's chief executive, this week defended it as a "good price" and sought to win over dissident shareholders by outlining the long-term benefits of a takeover of the LSE, and by announcing dividend increases and a share buy-back of about €200m (£138m).
Deutsche Börse is competing with the Amsterdam-based Euronext, which is not facing the same amount of shareholder opposition. It has not put a value on its offer yet and would have to hold a shareholder vote on any bid under Dutch law.Reuse content