Rebel Deutsche investor to force vote on LSE bid

The supervisory board of Deutsche Börse will meet today to discuss the demands of a rebel shareholder trying to scupper its £1.35bn takeover of the London Stock Exchange (LSE).

The supervisory board of Deutsche Börse will meet today to discuss the demands of a rebel shareholder trying to scupper its £1.35bn takeover of the London Stock Exchange (LSE).

The Children's Investment Fund Management (TCI), a hedge fund which claims to speak for 5 per cent of Deutsche Börse's shares, has called on the board to drop its 530p offer for LSE, saying it will destroy shareholder value.

It is also calling for a shareholder vote to remove the current board of the German exchange, led by chairman Rolf Breuer, who also chairs Deutsche Bank.

Christopher Hohn, who runs the fund, wants Deutsche Börse to buy back shares instead. "Repurchases of the company's own shares by Deutsche Börse would be far superior in value creation," Mr Hohn said.

He believes a number of shareholders feel the same way and wants to have a vote on the LSE deal. Following the Deutsche approach to the LSE in December, Mr Hohn wrote to Werner Seifert, chief executive of Deutsche Börse, asking that shareholder approval be made a condition of a bid. "Were Deutsche Börse a UK company, shareholder approval would be compulsory under UK listing rules," Mr Hohn said. But German company law allows a board to go ahead with a takeover offer, regardless of its size, without consulting shareholders. So far, Mr Hohn's demands have gone unanswered.

At the weekend, TCI wrote again to Deutsche Börse, stating its demands and formally requesting a shareholder vote. TCI's 5 per cent shareholding does allow it to request an extraordinary meeting to call for the removal of the supervisory board. "Considering the management board and the supervisory board have not at all addressed our concerns and thus lost the confidence of a significant number of shareholders, we have also requested a vote to remove the supervisory board members," Mr Hohn said.

He may take legal action against Deutsche if his requests are denied, on the ground that the directors are personally liable if there is any loss or damage to the company.