Swedish bid puts pressure on LSE

The London Stock Exchange was last night under pressure to re-negotiate the terms of its troubled merger with Deutsche Börse to fend off an £802m takeover bid from OM Group, the Swedish company that runs the Swedish stock exchange.

The London Stock Exchange was last night under pressure to re-negotiate the terms of its troubled merger with Deutsche Börse to fend off an £802m takeover bid from OM Group, the Swedish company that runs the Swedish stock exchange.

The London Stock Exchange rejected OM's initial approach on Friday evening but the Swedish company is expected to launch a hostile bid this week.

Deutsche Börse said over the weekend that it is prepared to make changes to the deal to create the controversial iX exchange. Weiner Seifert, Deutsche Börse's chief executive said: "If the Swedish bourse presents a hostile takeover bid, Deutsche Börse will be prepared to change its merger plans in collaboration with LSE with a view to preventing the takeover."

But the LSE insisted there were no current plans to re-negotiate the terms, with a spokesman saying only: "We are delighted with the support of Deutsche Börse."

Angry shareholders in the London Stock Exchange said the Takeover Panel may now insist that the LSE delay a crucial vote to decide on the Deutsche Börse merger on 14 September. Angela Knight, chief executive of Apcims, the trade association representing retail stockbrokers, said: "I would have thought the Takeover Panel would have a view on all this. The panel may say to the exchange that it has to wait." The Panel delcined to comment.

Apcims, whose members account for about one-third of LSE shareholders, has consistently called on the LSE to delay the iX vote. Apcims said more detail is needed about how iX would work in practice, and OM's move reinforced the need for a postponement.

An LSE spokesman said the Panel was not currently involved because OM had only made an approach and not a formal offer to the exchange. "If an offer is made, we may have to delay the vote," a spokeswoman conceded.

If OM Group does launch a hostile bid the terms are not expected to be materially different from its initial friendly approach. This would comprise £7 per share in cash and £20 in OM shares. This would value the LSE at £802m and compare with a closing share price of £23.50 on Friday.

The intervention of the Swedish company is certain to alert other stock exchanges around the world which have already expressed an interest in the LSE. Apcims has urged the LSE to make public the details of an offer it received from a consortium led by the Paris Bourse before its planned merger with Deutsche Börse. The Nasdaq market in the United States may also now be interested.

OM Group is a publicly quoted company in Sweden with a market value of £2.6bn. Originally Sweden's derivatives market, it merged with Stockholm stock exchange in 1998. Per Larsson, OM's chief executive, declined to comment on the bid in an interview yesterday. "We want to create value, providing expertise with our exchanges," he said. "We are going to build our leadership in technology."

OM Group is being advised by Lazards. The LSE is being advised by Salomon Smith Barney and Merrill Lynch.