We are not for sale, LSE chief Furse tells predators

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The Independent Online

The London Stock Exchange chief executive Clara Furse hit back at her critics yesterday and attacked other exchanges for pursuing "mergers and acquisitions for the sake of it".

Ms Furse was speaking as the LSE reported that pre-tax profits more than doubled to £76.7m from £29.4m in the six months to 30 September on revenues of £163.3m, up by a fifth. The exchange also increased its dividend by 50 per cent to 6p.

A defiant Ms Furse insisted: "We are not for sale. These results show we have no need to sell ourselves.

"For us, mergers and acquisitions are a means to an end, not an end in itself. Some other exchanges believe consolidation is a strategy. We believe it should be about growth that delivers value for shareholders and for our customers. That is what drives our strategy which is to become the world's capital market."

The exchange is, however, in talks with a number of rivals over possible "business collaborations". They include the Tokyo Stock Exchange, but not the Hong Kong market where an earlier attempt at working together failed.

Ms Furse continued: "Our strategy is delivering an exceptional performance and we are very happy with that. In issuer services we raised more money in London than New York which is a remarkable feat when you consider the size of our economy and equity market."

Revenues from issuer services increased by 7 per cent with new flotations raising £25.7bn, nearly double the £13.3bn raised during the same period in 2005.

In total there were 247 new issues, down on the 306 last time, of which 38 were on the main market, against 47. The average size of a flotation on the main market increased to £465m from £333m.

Revenues from broker services - share trading - increased by 34 per cent and the total number of share trades increased by 24 per cent to 3.1 trillion. The number of terminals in the City receiving data from the exchange also increased by 11,000 to 119,000.

Despite Ms Furse's defiance, Nasdaq retains a 25.3 per cent stake and is still likely to make a second attempt to secure a takeover. However, it must wait until May to be able to offer less than the £12.48 at which it bought in. LSE shares closed up 8p at £12.80 yesterday.

Bridgewell Securities analyst Katrina Preston described the figures as "a strong set of interim results" and said they were in line with expectations. The broker has a "neutral" stance on the shares given the continuing uncertainty over the exchange's future ownership and the plans of the Nasdaq.

The LSE unveiled its results as it became clear that Deutsche Börse had failed with another attempted deal. The company said talks with the Milan stock exchange had been terminated.

Deutsche would like to break up the proposed merger between the New York Stock Exchange and Euronext but its proposals are likely to become mired in a lengthy competition inquiry. That is because a deal would create a single, dominant, European derivatives exchange with the merger of the Euronext-owned London futures exchange (Liffe) with Deutsche's Eurex.

Influential City organisations have already logged strenuous objections to the plans.

The NYSE is planning to slash its staff by 17 per cent in the wake of its merger with the electronic trading company Archipelago. It means that more than 500 jobs will go.

Foreign floats underscore London's strength

The London Stock Exchange underlined its strength in attracting overseas listings yesterday as the Peruvian mining company Hochschild mining made its debut and Dubai Oger Telecom unveiled plans for an $8bn flotation in London.

Russian steel group Severstal debuts next week and is likely to be valued at $12.7bn after pricing its shares towards the top end of expectations yesterday. Sistema Hals also began official trading yesterday after raising $356.1m.

Other recent listings include OGK-5, the Russian electricity generator, and Kazakh bank Kazkommetsbank. Pakistan Oil and Gas is another LSE client.

Stock exchange chief executive Clara Furse highlighted the exchange's success in attracting foreign clients as part of her bid to retain her company's independence. The debut of Hochschild is seen as a particular coup for the exchange, because it has previously struggled to attract countries from the Latin American region. They have tended to see the New York Stock Exchange or the Nasdaq as their "natural" homes.

But the LSE has been actively targeting the Latin American region to try to persuade them of the benefits of coming to London.

Non-US companies have become increasingly wary of listing their shares in the US because of the Sarbanes-Oxley corporate governance reforms. These are viewed as highly prejudicial to non-US businesses, which can also find it extremely difficult to delist their shares from the US because of its regulatory rules.

James Moore

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