LSE Boosts Defences Against Macquarie

by Robin Pilgrim, LawAndTax-News.com, London

22 February 2006

Following its rejection of the hostile takeover bid by Australia's Macquarie Bank, the London Stock Exchange announced last week that it will be more than doubling its special dividend payment to shareholders to GBP510 million (or 200p per share), in order to convince them that it should be permitted to retain its independence.

It also unveiled plans to commence a share buyback programme of up to GBP50 million per year, and to boost the total year dividend for Fiscal 2006 by 71%, to 12p.

Chris Gibson-Smith, Chairman of the London Stock Exchange, commented:

"The London Stock Exchange has a unique strategic position and an exceptional customer franchise. Our continued strong trading performance is delivering excellent financial results, which enables us to announce an increased capital return and significantly increased dividend. Macquarie's offer recognises none of this. It provides no value today and reflects no value tomorrow. Shareholders should continue to reject the offer."

In a statement, the LSE announced that:

"The Board believes that the current share price does not fully reflect the stand-alone value of the Exchange given its established performance, let alone its prospects and the fact that its P/E multiple remains at a discount to its listed peers. The Board’s primary objective is to deliver superior shareholder returns from current share price levels. The Board is confident of achieving this objective."

Earlier this year, the LSE reacted angrily to Macquarie Bank's decision to outline the full details of its takeover proposals directly to LSE shareholders, and again rejected the Australian bank's bid.

In a statement published last month, the LSE announced that:

"Macquarie's offer is a blatant attempt to acquire the Exchange on the cheap. The Exchange also announces today, in a separate announcement, its third quarter results which underline the high growth that the Exchange has achieved."

When Macquarie first made its 580 pence per share offer, the LSE announced that it rejected "outright this derisory proposal".

Macquarie finally withdrew its bid for the LSE on Tuesday.

A report in The Scotsman had suggested that the Bank would be unlikely to raise the offer higher than 680p per share, and revealed that Macquarie had dismissed the LSE as "a fundamentally low growth business which has suffered from poor cost control and...remains strategically isolated".

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