LSE chief claims Liffe rejected bid for 'an easy life'

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The Independent Online

The Chairman and chief executive of the futures exchange Liffe refused to remain on the board if the London Stock Exchange bought the company, and recommended a rival takeover bid last year because they wanted "an easy life", MPs heard yesterday.

Clara Furse, the LSE's chief executive, made the claims before the Treasury Select Committee as she defended the LSE's failure to win the auction for Liffe in October. The futures exchange recommended a £555m all-cash offer from Euronext, the LSE's Paris-based rival, over the LSE's £600m cash-and-shares bid. Sir Brian Williamson, Liffe's chairman, and Hugh Freedberg, the chief executive, realised £5m and £4.4m on their own holdings in the deal.

Under Euronext's offer, the pair retained their existing roles while taking responsibility for the Paris-based company's entire European derivatives operations. By contrast, the LSE offered them the roles of deputy chairman and deputy chief executive, serving under Don Cruickshank, the chairman, and Ms Furse.

"We were particularly disappointed to be informed, just before our final offer was received, that the chairman and chief executive of Liffe would not join the board if the LSE won the auction," Ms Furse said. "Euronext made a very generous offer with minimal change – no change in jobs – and that's quite compelling.... Liffe chose an easy life."

Liffe's board is thought to have unanimously recommended Euronext's offer before the LSE learnt of Sir Brian and Mr Freedberg's refusal to serve on an LSE board.

Ms Furse also publicly questioned the point of an auction that resulted in Liffe recommending a Euronext bid with £20m of synergies against the £35m on offer from the LSE. "We [were] in an environment where the standard rules of commercial behaviour [did] not apply," she said.

Sir Brian told the committee that Euronext's lower offer had prevailed because it was all-cash and its business case was ahead of the LSE's "on every score".

In the wake of the failure to win Liffe, the LSE said it was looking at a number of other opportunities to enter the derivatives market, possibly including an alliance with Euronext. "Anything is conceivable and obviously we have discussions going on with all the major exchanges," Ms Furse said.

However, Jean-François Théodore, Euronext's chairman and chief executive, conceded that it could take longer than four months to integrate trading of Liffe's computerised derivatives products, and longer still for non-computerised.

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