Macquarie quits; says will not raise or extend offer for LSE

Macquarie quits; says will not raise or extend offer for LSE

	Published : Tue, 21 Feb 2006 21:05 By : James Rowe Print this Story

The London Stock Exchange-Macquarie standoff yesterday ended with the Australian investment bank bowing out. The Australian group’s head of European operations said that neither party could settle on “a price that’s agreeable to all”.

For the past 14 months, the Australian group had been trying to buy the LSE and for this purpose had specially set up the London-based Macquarie London Stock Exchange Investments (MLX) headed by chief executive Jim Craig. The LSE held out all until now saying Macquarie’s bid was too opportunistic, it was almost a ‘rip-off’. It grossly undervalued the stock exchange and the Australian bank did not share the values and vision of the LSE management.

Late yesterday evening, Craig said that his organisation decided to withdraw after the LSE released its final defense document to drum up support. It had made a £1.5bn offer which LSE shareholders found unacceptable.

The Australians discussed their chances with Goldman Sachs, their advisor on this prospective acquisition, and agreed that even if Macquarie were to raise its offer to a level that MLX feels is right, the LSE would still reject it. They had also been speaking to LSE shareholders including Scottish Widows and Threadneedle and decided even a higher bid would be unacceptable.

In the document meant for shareholders, the LSE effectively countered every argument raised by MLX, such as cost efficiencies and gearing and left MLX with nothing but the price to argue about. The LSE in the meanwhile had been building its defense with plans to raise its share price. The stock exchange also offered half a billion worth of capital returns to shareholders.

Craig also said that Macquarie would not extend the offer beyond February 28 when it expires although it could easily have run until March 11.

The announcement made LSE share prices surge to 829p at closing yesterday.

The Australians’ withdrawal now gives the LSE its independence for some time and also leaves the field open for the next suitors Euronext and Deutsche Börse. These two groups could make their bids after the competition regulator gives them the go-ahead.