LONDON: Shares of the London Stock Exchange fell sharply on Wednesday after the operator of the New York Stock Exchange said that it had decided against making a counterbid for the London exchange.
The Intercontinental Exchange, the owner of the New York Exchange, had been seen as a potential rival to a planned merger between the London Stock Exchange and Deutsche Börse, which confirmed that they were in discussions in February and agreed to merge in an all-stock deal in March.
Jeffrey Sprecher, the chief executive of Intercontinental Exchange, known as ICE, told analysts in a conference call on Wednesday that the company had spent the last two months evaluating the data for a potential merger with the London exchange.
“We thought that the combination may have a compelling rationale,” Mr. Sprecher said, as it would bring “together the premier trans-Atlantic capital raising venues.”
But, he added, “The disappointing level of engagement of the L.S.E. ultimately did not allow us to make a complete determination of the integration benefits, and their related risks that ICE would require to support a bid.”
With hopes for a bidding war dampened, shares of the London Stock Exchange tumbled as much as 9.9 percent before closing down 4.2 percent. In Frankfurt, shares of Deutsche Börse rose 5.8 percent.
Analysts have speculated that the CME Group which operates the Chicago Mercantile Exchange, the Chicago Board of Trade and the New York Mercantile Exchange and Hong Kong Exchanges and Clearing could also ultimately emerge as suitors to break up a marriage aimed at creating a European champion in a rapidly consolidating industry.
The potential merger between the London Stock Exchange and Deutsche Börse comes at a politically charged time, as Britons prepare to vote in June on whether to leave the European Union.
The London Stock Exchange and Deutsche Börse have said that an exit by Britain would not change the deal, but that it could “well affect the volume or nature” of business carried out by the combined company.
The merger would allow London, which has served as a financial gateway to Europe, to maintain economic ties to the Continent. The companies say they hope to complete the deal by the first quarter of next year.
The combined company would be based in Britain, and would have headquarters in London and in Frankfurt.
Four years ago, Deutsche Börse abandoned plans to merge with the parent of the New York Stock Exchange after European antitrust regulators threatened to block the deal.
This is the third attempt to combine the London Stock Exchange and Deutsche Börse since 2000.
Courtesy : nytimes.com