LCH.Clearnet board backs LSE takeover offer
28 Sep 2011
The London Stock Exchange's (LSE) €1-billion (£860 million) takeover offer for financial clearing house LCH.Clearnet has won the backing its board over a rival bid by software firm Markit.
The Clearnet board, comprising its largest clients, chose to go with LSE's €21-a-share bid for 51 per cent of the company over Markit's bidof €12 a share for the whole company, plus an "earn-out" clause of €3, taking the total value to €15-a-share.
The deal is being seen as a major coup for LSE's chief executive Xavier Rolet, who earlier this year failed to secure a $3.2-billion (£1.9 billion) merger with Canadian bourse TMX due to lack of shareholder support.
Clearing houses, which are seen as "the plumbing of the financial system" – ensure completion of trades of products such as shares and bonds. Clearing houses are now in the spotlight due as regulators seek to drive as many private derivatives as possible through them in a bid to stabilise the financial system.
Analysts and investors have from the word go supported the LSE strategy to acquire LCH.Clearnet – the biggest independent clearer in Europe.
The deal would allow the LSE to bring about a further diversification of its structure with new regulations, in the offing following the financial crisis.