Shame of the silent LSE shareholders

Why weren’t bosses quizzed on German takeover?

THE shareholders who own the London Stock Exchange have been accused of a shameful silence after failing to challenge bosses on a German takeover.

Investors and company directors gathered at the group’s annual general meeting yesterday for a rare question and answer session.

But not one major shareholder in the hundred- strong audience spoke out against proposals to put Frankfurt-based Deutsche Boerse in control.

A senior MP accused them of ending the institution’s 215 years of independence for the sake of a profit.

The Mail contacted several leading LSE shareholders, including Invesco, Blackrock and Fidelity, to ask about their position regarding the deal with the Germans – but they all declined to comment.

In the marble atrium of the City’s Banking Hall, chairman Donald Brydon argued that a foreign takeover would be ‘in the best interests of the group, shareholders and customers’.

Both sides in the £21bn deal argue it will be a ‘merger of equals’. But the new company will be led by German chief executive Carsten Kengeter, Deutsche shareholders will have a 54.4pc controlling stake and profits will be reported in euros.

Bosses have promised it will be headquartered in London – but even this concession is coming under pressure from German politicians and business leaders.

Tory MP Sir Bill Cash said: ‘The shareholders appear to have abdicated responsibility.

‘They appear to be putting their selfish interest ahead of the national interest. Where is the due diligence?’

Even Kengeter appeared to cast doubt over the location of the HQ, suggesting terms could change in the event of a Brexit. Both Deutsche and the London exchange have since strongly denied the location is up for debate.

At the meeting, Brydon told shareholders they would get an opportunity to ask about the deal when details were finalised.

He said a Brexit would have ‘no impact’ on the plans and stressed he did not foresee any problems with competition watchdogs.

A special meeting will discuss the takeover, when shareholders will be asked for formal approval.

This will happen around the time of the EU referendum on June 23. It is likely to come after the vote if the polls are neck-and-neck, but may be before if Remain has a clear lead.

The chairman said the deal was ‘a true merger between two highly complementary partners’.

He asked shareholders for their support, although sources stressed the time for them to ask detailed questions would be when the proposals were put to a vote.

Brydon lavished praise on the ‘outstanding job’ done by chief executive Xavier Rolet, who sees the deal as the crowning glory of his seven years at the helm.

Rolet has agreed to step aside and make way for Kengeter – a move Brydon characterised as ‘a typically selfless act in the interests of shareholders’. It is claimed that the chief executive stands to profit handsomely from his own shares in the group if the takeover goes ahead.

And the group earlier this week clarified Rolet’s comments on another potential buyer, America-owned Intercontinental Exchange. The chief executive used an interview to argue the business, which he did not name directly, was a ‘slash and burn’ organisation.

After discussions with the UK Takeover Panel – whose code prohibits misleading statements – the exchange put out a notice saying Rolet had ‘ held no discussions with ICE regarding its strategy’.

In a quarterly statement yesterday, the group said revenues were up 8pc to £358.9m. Shares closed up 0.2pc, or 6p, at 2765p.