Clara Furse, chief executive of the London Stock Exchange, has proved a difficult woman for potential bidders to impress, or even to meet, as the fight for the exchange steps up a gear, according to MarketWatch.
Furse has consistently dismissed offers for the LSE as too low, a tactic that has been widely applauded as the LSE’s shares 250% in the last year.
Her most recent rebuff was to the Nasdaq Stock Exchange’s recent 950-pence-a-share, or $4.2 billion.
The eventual buyer, if there is one, will now have to pay top dollar to win over shareholders. Analyst estimates of what Nasdaq could afford to pay range between 1,074 pence and 1,650 pence a share, although observers are divided over whether Furse and the LSE will ever endorse a bid.
But in an editorial published in the Daily Mail days after Nasdaq’s bid, Furse alluded to her strategy, as she criticized U.K. companies and investors as too willing to sell out to foreign buyers “rather than fight their corner or go on the offensive.”
“It seems that those running UK companies are responding to what they see as a collective loss of nerve on the part of professional investors,” Furse said without mentioning the LSE specifically. “We now live in a society that prizes certainty.
“Sadly, the City [London’s financial industry] is increasingly influenced by a political culture that eschews risk, even though it means foregoing the chance of significant reward. “It is fervently to be hoped that British businesses may start to look again at creating value through expansion,” she added.
The exchange has also attempted to fight off a takeover by doubling the amount of money it returns to shareholders to 510 million pounds ($892 million).
The current round of takeover speculation kicked off in December 2004 when the Deutsche Boerse launched a conditional offer, which was eventually pulled after shareholder pressure. But it was then followed by a 580-pence-a-share offer from Australia’s Macquarie Bank.
Since the Macquarie bid, LSE shares have almost doubled to 1,146 pence. In particular, the LSE has grown as an international venue, attracting 33% of all international listings on major exchanges in 2005 and 63% of all European IPOs since 2000.
Furse took the LSE public in the summer of 2001, and, under her leadership, annual net profit has roughly quadrupled to 61.5 million pounds.
In 2001, shortly after her arrival, the LSE lost out to rival Euronext in the battle to buy the London Financial Futures and Options Exchange (Liffe), London’s leading derivatives exchange.
The failure to take control of the Liffe occurred even though Furse had extensive links to the futures market, having spent around nine years as a Liffe board member, including two years as deputy chairman.
The lack of a derivatives business is one of the key reasons that the LSE continues to be viewed as a takeover target, commentators agreed. Euronext and Deutsche Boerse are reaping benefits from derivatives income, despite the LSE’s being Europe’s biggest cash equities market.