Macquarie given deadline to 'put up or shut up' on LSE bid

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The acquisitive Australian investment bank Macquarie was yesterday given three weeks to "put up or shut up" about any offer for the London Stock Exchange.

The Takeover Panel, which polices mergers and acquisitions in Britain, told Macquarie it must table a formal bid by 5pm on 15 December or walk away for at least six months. The Sydney-based bank first signalled its interest in the LSE in August, and has hired the investment bank Goldman Sachs to advise on a possible offer. By November, the absence of any formal proposal prompted the LSE to urge the panel to intervene.

Goldman is understood to be working on a plan to take a large equity stake in the LSE alongside Macquarie, and is said to have pushed the panel for no deadline until after February. Other top brokers would stand to scoop stakes in the LSE under the plan - dubbed the "City Co-op" - in return for the transfer of all their business to London.

The scheme will run into strong opposition from smaller LSE users concerned about a Goldman-dominated exchange. An LSE spokesman said: "We welcome the announcement by the panel. It's a key step towards ending the disruption around the offer period."

Macquarie is still interested in the LSE but is thought to be concerned that the bid premium attached to the shares is making any deal less attractive.

LSE shares have surged more than 70 per cent since speculation about a possible bid emerged more than a year ago. Yesterday's deadline appeared to dampen prospects for a formal offer, and they eased 9p to 595p.

The LSE wants Macquarie to stump up more than 800p a share before sitting down to talk. Analysts have put a fair value of up to 660p on LSE shares, with 571p an average.

London's exchange has long been coveted by European rivals. Germany's Deutsche Börse pulled an indicative 530p-a-share offer in February after a shareholder revolt over its handling of the approach. Werner Seifert, the former head of the German exchange, is advising Macquarie on its potential bid.

The LSE has also been talking to the Franco-Dutch exchange Euronext for more than a year. It too has yet to table a formal bid and may struggle to persuade investors to agree to a price that the LSE would accept. A merger of Euronext and the LSE or Deutsche Börse is increasingly thought more likely.

The LSE, under its chief executive Clara Furse, is believed to favour a merger of equals to an unwelcome takeover by the Australian-led consortium.

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