The London Stock Exchange has dismissed the hostile bid from the Swedish OM Group as "wholly inadequate" and has stressed it could remain independent.
In its defence document issued to shareholders yesterday, the LSE failed to produce an alternative strategy for the exchange in the wake of the collapse of merger talks with Deutsche Borse. It told shareholders there was no need to do a deal at this time.
LSE chairman Mr Don Cruickshank described OM's offer as an attempt to buy the exchange, Europe's biggest, "on the cheap". OM is offering to buy LSE shares for £27.63 sterling each, valuing it at £805 million sterling (#1.34 billion). The offer includes a mixture of cash and new OM shares, which Mr Cruickshank warned are of "uncertain value".
The LSE and OM are both meeting shareholders, including the Irish stockbroking firms which collectively hold 4.9 per cent of the shares. These are ABN Amro Stockbrokers, AIB Corporate Finance, BCP Stockbrokers, Bloxham Stockbrokers, Campbell O'Connor, Dolmen Butler Briscoe, Dolmen Securities, Fexco Stockbroking, Goodbody Stockbrokers, IIU Stockbrokers, J & E Davy, NCB Stockbrokers and W & R Morrogh (Stockbrokers).
Others to benefit include Garban Ireland, the inter-dealer broker in the Government bond market, and AIB Corporate Finance, which has a separate LSE membership from AIB's Good body stockbroking firm.
They each stand to gain around £750,000 sterling plus new OM shares. OM stock makes up around 75 per cent of the value of OM's offer and is currently trading at 85 times historical earnings.
The document questioned the sustainability of OM's share price and emphasised that the stock is tightly held.
LSE director of business development, Mr Martin Wheatley, told The Irish Times it would meet Irish shareholders in the coming weeks.
He said the document gave a "short sharp response" to the OM bid and stressed to shareholders that the LSE was a valuable business. Mr Weatley said its future strategy would depend on developments in Europe and it would take its time and listen to what shareholders wanted before finalising that strategy.
OM shares sank 11 crowns (#1.30) to 433 crowns yesterday while LSE stock fell 6 per cent to £29 sterling. OM is offering 0.65 new shares and £7 in cash for each London bourse share.
Responding to the document, OM urged the LSE to reconsider its "sound and valuable" offer.
