Deutsche Borse was last night considering mounting an unsolicited takeover offer for the London Stock Exchange following the collapse of its iX merger proposal.
The LSE yesterday withdrew from the iX merger plan to defend itself against a hostile bid from Sweden's OM Group.
Mr Don Cruickshank, LSE chairman, indicated that any takeover proposal from Deutsche would be considered hostile. "Deutsche Borse is not a white knight" for the LSE in its attempts to see off the OM bid, he said without speculating on whether there were any preferred partners following the iX collapse.
Deutsche Borse is believed to be keen to avoid launching a hostile bid because of the complex shareholding structure of the LSE. But it is understood that it regards a deal with the LSE as its preferred option and that possible link-ups with other European exchanges or Nasdaq, the US technology market, are secondary priorities.
Mr Cruickshank's comment indicated that relations between the two exchanges have been damaged by the collapse of iX. Deutsche Borse said it had received news of the LSE's withdrawal "with regret".
Mr Cruickshank said London would also seek a full listing for its shares, which are traded on a special market.
Any attempt by Deutsche Borse to take over the LSE is likely to bring other bidders into the fray, bankers said.
Nasdaq, the US technology market that had a joint venture arrangement with iX, said it would continue to work with both the LSE and Deutsche Borse in spite of the collapse of the merger.
Mr Frank Zarb, chairman of Nasdaq, said he remained committed to having a stake in a pan-European trading platform.
Nasdaq would not confirm that it was in talks with OM Group but it is believed to have been contacted by all major parties involved in the battle for the LSE.
The LSE is understood to have considered the iX project unworkable after Deutsche Borse said on Monday it was "keeping all its options open" after deciding not to seek the backing of its shareholders for the merger plan.
