'Woeful' Macquarie bid would harm LSE

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The Independent Online

The London Stock Exchange yesterday decried Macquarie's £1.5bn hostile bid as an attempt to shut out shareholders from participation in its evolution into the first global bourse.

Five of six City experts cited in the LSE's defence document reckoned the LSE shares were worth more than the 580p offered by the Australian investment bank. They advanced 26.5p to 676.5p yesterday, within a whisker of a fresh high.

Clara Furse, the chief executive of the LSE, said: "The sector is at a transformational phase of corporate development. The LSE is the natural centre for the world's capital markets.

"Macquarie's opening shot at 580p is either woeful or disingenuous. It appears to demonstrate a complete misunderstanding of the global exchange sector and our pivotal position in it. Our board believes Macquarie's proposal would harm the quality, efficiency, stability and international competitiveness of the UK equity market."

The LSE declared Macquarie wrong to claim growth prospects are thin simply because of an absence of a fast-expanding derivatives business.

The volume and value of business in London has grown faster than on major European derivatives exchanges in each of the past two years. The LSE's healthy share price, which Macquarie argues has been fluffed and flattered by ongoing bid speculation, simply reflects the decent growth and earnings potential of the business.

Nevertheless, the LSE is still cheaper compared to its earnings than Germany's Deutsche Börse, Euronext in Paris or the Nasdaq US technology index. But Jim Craig, the head of Macquarie's European operations, said: "The LSE has again avoided focusing on matters within its control, pinning its hopes on cyclical equity and IPO market movements, and an optimistic belief in global exchange consolidation."

Meanwhile, a group of European banks trading on Euronext, including BNP Paribas, Crédit Agricole, ABN Amro and Banco Espirito, are reportedly in talks to form a consortium to try to ensure any merger with Deutsche Börse is one of equals.

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