Counter Offers

Deutsche Börse Faces Rivals in LSE Bid

Deutsche Boerse headquarters in Eschborn near Frankfurt Source Arne Dedert dpa
Deutsche Börse could see its merger with LSE thwarted by the U.S.-based ICE.
  • Why it matters

    Why it matters

    Deutsche Börse could face its third failed attempt to grow in Europe if rival exchanges succeed in thwarting the merger with London Stock Exchange.

  • Facts

    Facts

    • Intercontinental Exchange owns the New York Stock Exchange and ten other bourses around the world, including derivatives and energy securities platforms.
    • Shares of the London Stock Exchange jumped by more than 7 percent on Tuesday, while those of Deutsche Börse gave up most of its gains on news of the possible ICE counter-offer.
    • Deutsche Börse CEO Carsten Kengeter last week said his goal is to become number one or number two across all major divisions globally.
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The Intercontinental Exchange, a U.S-based group that owns 11 stock and securities markets around the world, said Tuesday it may make a counter offer for the London Stock Exchange, which could upend Deutsche Börse’s bid to become one of the world’s top three stock exchanges.

The Chicago Mercantile Exchange, the world’s largest trading platform by market value, is also looking whether it could challenge the Deutsche Börse-LSE deal, people familiar with the matter told news agency Bloomberg. A counterbid for LSE is the most likely option but the Chicago-based exchange may choose not to proceed, Bloomberg reported. CME declined to comment.

Shares of LSE jumped to an all-time high Tuesday, up more than 8 percent to 29.08 pounds, or $40.49, at 2:36 pm London time, after news the ICE, the owner of the New York Stock Exchange, confirmed it was considering a bid.

Deutsche Börse shares gave all their gains from earlier in the day after news of the rival bids broke. The stock was the only decliner in the German blue-chip DAX index, falling 0.2 percent at €76.03 in Frankfurt.

“(The) ICE counter bid for LSE could have very strong chances,” Diego Perfumo, an analyst with Equity Research Desk in London, said in an email to Handelsblatt Global Edition.

Banks would prefer ICE to buy LSE based on previous deals the U.S. exchange operator has made, Mr. Perfumo said. Furthermore, a takeover price of 30 pounds per LSE share, or $14.7 billion in total, could still boost ICE’s 2016 earnings per share by 6.7 percent, if the deal were funded by a share and debt issue, the analyst said.

Last week, Deutsche Börse and LSE announced plans to merge their operations via an all-share transaction that would make it the world’s number two or three trading platform after Chicago-based CME Group and ICE. It marks the third time in the last 16 years that the two exchanges have tried to merge.

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