ICE would keep Lon­don Stock Ex­change if it bought LSE Group

The Pak Banker - - MARKETS/SPORTS -

In­ter­con­ti­nen­tal Ex­change Inc. has de­cided it would keep Lon­don Stock Ex­change Group Plc's name­sake equity mar­ket if it suc­cess­fully buys the par­ent com­pany, ac­cord­ing to peo­ple fa­mil­iar with the mat­ter, a re­ver­sal of strat­egy from the last time ICE pur­chased a Euro­pean stock ex­change.

Though its cor­po­rate name im­plies oth­er­wise, Lon­don Stock Ex­change Group runs a con­stel­la­tion of busi­nesses that go far be­yond trad­ing stocks. The jew­els of the op­er­a­tion are prob­a­bly a ma­jor­ity stake in LCH.Clear­net Group's swaps clear­ing­house and the FTSE Rus­sell in­dex com­piler. By re­tain­ing the Lon­don Stock Ex­change, At­lanta-based ICE would own two iconic equity plat­forms with roots go­ing back cen­turies -- the other be­ing the New York Stock Ex­change. ICE views the LSE as a valu­able global brand along­side the NYSE. Re­tain­ing it could help em­pha­size to U.K. reg­u­la­tors tasked with ap­prov­ing any deal that it views Lon­don as cen­tral to its busi­ness, ac­cord­ing to the peo­ple, who asked not to be iden­ti­fied be­cause talks are pri­vate.

Mar­kets like the LSE and NYSE are per­ceived as em­blems of a na­tion's eco­nomic prow­ess. Com­pa­nies have a duty to find the best deal for their share­hold­ers, but reg­u­la­tors some­times let na­tional in­ter­ests in­flu­ence their ap­proval of takeovers. Even though com­pe­ti­tion has made them less lu­cra­tive, stock ex­changes are im­por­tant to their home economies be­cause com­pa­nies rely on them to raise cap­i­tal.

That's why per­cep­tion, even be­fore a for­mal of­fer is pre­sented, mat­ters.

ICE is wait­ing for a deal be­tween Frank­furt-based Deutsche Bo­erse AG and LSE to emerge be­fore po­ten­tially mak­ing its own higher of­fer, said the peo­ple fa­mil­iar with the dis­cus­sions. The Ger­man and U.K. ex­change com­pa­nies may an­nounce a deal as soon as next week, the peo­ple said.

Of­fi­cials for ICE, Deutsche Bo­erse and LSE de­clined to com­ment.

Cap­i­tal mar­kets, which in­clude equity trad­ing on the Lon­don Stock Ex­change, ac­counted for less than a quar­ter of the par­ent com­pany's in­come last year. LCH and FTSE Rus­sell are viewed by an­a­lysts as faster grow­ing busi­nesses. But stock ex­changes carry iconic value that can out­strip their tan­gi­ble fi­nan­cial worth.

Take the Chicago Stock Ex­change, for in­stance. It's prac­ti­cally an af­ter­thought in the U.S. equity mar­ket, amount­ing to about 0.5 per­cent of the na­tion's trad­ing. How­ever, news that a Chi­nese-led group agreed to buy it pro­voked up­roar a few weeks ago, with politi­cians call­ing for a na­tional-se­cu­rity re­view of the deal.

Newspapers in English

Newspapers from Pakistan

© PressReader. All rights reserved.