Hedge funds threaten boardroom shake-up at Deutsche Börse

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The Independent Online

Atticus Capital and The Children's Investment Fund renewed their assault on Deut-sche Börse yesterday by threatening to push for new man-agement to boost shareholder value at the German exchange operator.

The two activist hedge funds, which own a total of 19 per cent of the Frankfurt-based exchange, said in a joint statement that they would consider "all options" for boosting the company's value. "This may include seeking to change some of the members of the supervisory board in order to ensure leadership and urgency requiring appropriate options," they added.

The funds led a campaign against Deutsche Börse's previous chief executive, Werner Seifert, in 2005 that resulted in his removal after shareholder opposition scuppered his bid for the London Stock Exchange. The campaign shook up Germany's corporate culture and prompted the chairman of the Social Democratic Party to compare the funds to "locusts" swarming over Germany. They supported the appointment of Mr Seifert's replacement, Reto Francioni, who has returned cash to shareholders, cut costs and shown himself to be willing to sell assets.

Deutsche Börse operates the Frankfurt Stock Exchange and Eurex, the derivatives platform. It also owns the clearing and settlement network Clearstream.

Deutsche Börse said it was in constant dialogue with its shareholders. Its shares rose 5.4 per cent on hopes that the funds' intervention would result in cost cuts, additional cash to shareholders or asset sales.

Deutsche Börse returned €725m (£590m) to shareholders last year and recently resumed share buy-backs that were suspended after buying the International Securities Exchange for $2.8bn (£1.57bn).

Atticus attacked the takeover of ICE, the US options market, last year and said it had lost confidence in Deutsche Börse's management, but has since become more supportive.