Euronext moves on London Stock Exchange

Wall Street Journal (paid sub req): Euronext NV has made a preliminary approach to the London Stock Exchange PLC about a possible bid for the London exchange, the companies said Monday. “The approach is at an early stage and therefore does not require a response at this point,” the London Stock Exchange said.

In Amsterdam, Euronext confirmed that it had made an approach but said there was no assurance that an offer would be made.

The London Stock Exchange is the third-largest exchange in Europe when measured by its own stock-market value, behind Deutsche Boerse of Frankfurt and Euronext of Amsterdam.

BBC News: Pan-European group Euronext is poised to launch a bid for the London Stock Exchange, UK media reports say. Last week, the LSE rejected a takeover proposal from German rival Deutsche Boerse – the 530 pence-a-share offer valued the exchange at about £1.35bn. The LSE, which saw its shares rise 25%, said the bid undervalued the business.

Euronext – formed after the Brussels, Paris and Amsterdam exchanges merged – is reportedly working with three investment banks on a possible offer. The LSE, Europe’s biggest stock market, is a key prize, listing stocks with a total capitalisation of £1.4 trillion.

Bloomberg: Earnings at the London exchange have lagged both Euronext and Deutsche Boerse as the European exchanges bought rivals and developed bigger derivatives markets. The market for exchange- traded equity derivatives was worth about $3.5 trillion as of September, according to the Bank for International Settlements.

The LSE failed in 2001 to buy Liffe Holdings Plc, London’s futures and options exchange, after being outbid by Euronext. Liffe would have brought LSE closer in size to Eurex AG, the world’s largest futures market, which is half-owned by Deutsche Boerse.

A year later, the LSE entered the market for equity derivatives by starting EDX London with OM AB. The unit contributed 3.6 million pounds to LSE’s first-half revenue this year. Eurex reported second-quarter sales of 101.7 million euros.

In addition to its stake in Eurex, Deutsche Boerse owns Clearstream International, Europe’s No. 2 securities settlement company. LSE doesn’t have a clearing or settlement business.