Macquarie moved yesterday to allay concerns among London Stock Exchange customers that charges could soar should the Australian investment bank win control of it.
The offer document declared Macquarie is working towards a "binding agreement" to freeze tariffs should shareholders accept its £1.5bn hostile offer.
The £1.2bn of debt that Macquarie London Exchange Investments - the bid vehicle - arranged through Dresdner Kleinwort Wasserstein to finance the lion's share of its bid looked to be unsecured. That means that the Australians cannot dip into the LSE's cash to meet interest payments. That too is intended to ease concerns over possible price rises. Macquarie pledged that the LSE would be run by a board comprised largely of independent directors. Jim Craig, the head of Macquarie's European operations, said: "We think we have addressed the majority of user issues. The consultation will continue over the next fortnight. The importance of this document is that it allows us to get the discussion going."
Groups representing the LSE's customers gave a cautious welcome to the offer document but said Macquarie must go further before they would back its bid.
A spokesman for Apcims, the smaller stockbroker group, said: "We would still like to see a firm commitment on pricing and binding agreement to work with key user groups to set long-term strategy for the exchange going forward."
Macquarie's offer still looks unlikely to find favour. Pitched at 580p a share, it falls well shy of the 615p price yesterday.
The LSE management and its two biggest shareholders - Threadneedle and Scottish Widows, which control one-fifth of the company - dismissed the bid as far too mean. The LSE re-iterated its conviction that the Australians want the business on the cheap.
One LSE investor, European Financial Instruments, has accepted Macquarie's offer for its 792,000 shares. It is controlled by the blue-chip US hedge fund Och Ziff, which is thought to have considered joining Macquarie's bid consortium. That consortium is stumping up more than £300m. Macquarie is putting up £107m and Centaurus and CQS - two hedge funds - £44m each. Matthew Perrin, who is behind Billabong surfwear, is contributing £9m and the Spanish investment house Finpro £44m.
Macquarie said again ongoing takeover speculation has fluffed up the LSE market value, which fundamentally should be only 500p a share. Analysts have a stand-alone value of 430p to 700p. Macquarie insisted the LSE is a low-growth business where costs have been managed badly. The LSE hit back with a bumper quarterly trading update. Revenues in the three months to the end of December were 16 per cent higher at £210.6m.
Meanwhile it emerged that Michael Spencer, the millionaire who built the Icap brokerage, has exposure to LSE shares worth more than £20m through his IPGL investment vehicle. He has built a 1.5 per cent exposure over the past 18 months through complex derivative instruments.Reuse content