OM prepares to bid £1bn for Exchange

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The Independent Online

OM, the Swedish group bidding for the London Stock Exchange, has told members it is willing to raise its bid by up to 50 per cent to value its target at more than £1bn.

OM, the Swedish group bidding for the London Stock Exchange, has told members it is willing to raise its bid by up to 50 per cent to value its target at more than £1bn.

OM's initial cash-and-shares bid, which currently values each LSE share at about £25 after an 18 per cent fall in OM shares in recent weeks, was last week overwhelmingly rejected by the LSE's members. However, OM's senior management has indicated to LSE shareholders its willingness to pay £40-a-share, a price which may prove too tempting for ambivalent members.

The willingness of some shareholders to countenance a higher offer from OM reflects frustration with the LSE's failure to identify a new strategy following the collapse of its planned merger with Deutsche Börse. The LSE's board came under fire at last month's annual general meeting and the resignation of chief executive Gavin Casey, who has still to be replaced, has failed to placate its critics. There have been calls for other members of the LSE's board to resign and one of its advisers, investment bank Merrill Lynch, has since stepped down.

Don Cruickshank, the LSE's chairman, has declined the offer of a technical partnership with Liffe, London's futures exchange. So far there has been no sign that the LSE will seek a deal with either Euronext, the French-led group of European exchanges which is keen to embrace the UK, or Nasdaq, in America.

UBS Warburg, the investment bank which has built up the largest single stake in the LSE, remains wedded to the idea of a link with Euronext.

But Ian Harley, chief executive of Abbey National, told the Independent on Sunday: "We will vote the way that suits our pocket. I don' think it will make a lot of difference to UK plc."

LSE shares were trading at less than £20 shortly after its demutualisation in the summer.

The success of a revised bid by OM may rest on the outcome of the LSE's extraordinary general meeting next week which has been called to sanction the lifting of the 4.9 per cent ceiling on shareholdings. A successful bid would require the approval of 75 per cent of LSE's shareholders.

Mr Cruickshank yesterday attempted to allay some of the complaints by announcing the creation of a new consultation structure designed to reflect the separate needs of the retail brokers which have been its biggest critics.

He also made his first public apology for "those times when we get it wrong", which was thought to be a reference to the failed merger with Deutsche Börse.

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