(August 29) – “British brokers and traders had a hard enough time absorbing the idea that a German might soon be running the London Stock Exchange. But a Swede?
OM Gruppen AB, which owns the Stockholm Stock Exchange, may not succeed in its audacious and unsolicited bid to acquire the venerable and much bigger London exchange. But it could well unravel the already fraying plan of the LSE to merge with the Deutsche Börse AG in Frankfurt, and it provides another example of how Europe’s new generation of competitors often come from unexpected quarters, The New York Times reports.
Last week, just three weeks before shareholders of the London exchange and Deutsche Börse were scheduled to vote on a full merger, OM Gruppen made an informal cash-and-stock bid of about £800 million, or US$1.18 billion, for the LSE. The London exchange rejected the offer, arguing that merging with the Frankfurt exchange would provide a stronger base in the long term.
OM executives are now weighing a hostile takeover bid and are expected to spell out their plans later this week.
In response, executives at the Frankfurt stock exchange said Monday that they would consider sweetening their offer if they saw the need. But people close to the German exchange admit the issue is politically sensitive, because London and Frankfurt officials labored to come up with an exchange of shares that amounted to a “merger of equals.” Increasing the offer would turn the deal into a takeover and would probably increase the hostility of many smaller brokerage companies that are already upset about having to adopt a new trading system.
People on all sides are struggling to provide a pan-European trading system, because balkanized national exchanges are under increasing pressure from new electronic trading networks that are faster, cheaper and potentially better suited to an integrated European marketplace.”