Regulator gives conditional green light for LSE takeover |
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Tue, 01 Nov 2005 16:20
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LONDON - The Competition Commission today gave the nod for a formal bid by bid by European bourse operator Euronext for taking over the London Stock Exchange.
However the Commission ruled that Euronext and Deutsche Börse, the German exchange that is also in the running for LSE, should allow easy access to the LSE's clearing house activities and not impede these in any way. This ruling brings to an end a seven-month enquiry by the Commission on the feasibility of allowing bids to be placed for the LSE.
It is estimated that the deal would be worth £1.5 billion plus. Euronext, the pan-European exchange operator, and Frankfurt based Deutsche Börse are now free to continue their interest in the LSE, which is a lucrative takeover target. Australia's Macquarie Bank is also said to be mulling over a possible bid as a part of a consortium.
The Commission has also ruled that Euronext should reduce its stake in the LSE's current clearing service provider, LCH.Clearnet to 14.9 percent. Currently, Euronext holds 41.5 percent in LCH.Clearnet. It also ruled that Euronext should have only one representative on Clearnet's board.
In response, Euronext issued a statement saying, "The Euronext board will review the contents of the Competition Commission's report and analyze the potential economic impact of those undertakings, particularly the divestment requirement relating to Euronext's shareholding in LCH.Clearnet."
The company, which runs the Dutch, Belgian, French and Portuguese stock exchanges, is seen as a front-runner in this race to win the LSE. Deutsche Börse shelved its bid after objections from its shareholders.
In the backdrop of this news LSE shares rose by 4 pence to 570.5 pence by this afternoon.
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Competition Commission renews debate over LSE takeover 