LSE bats away deal talk with strong results

THE London Stock Exchange reassured investors of its financial clout at its shareholder meeting yesterday but refused to be drawn on any potential partners following the collapse of its merger with Canada’s TMX Group.

LSE chairman Chris Gibson-Smith blamed the breakdown of the £2.4bn merger firmly on TMX for failing to marshal its shareholders to support the deal agreed.

He also used a strong set of quarterly results, which showed group revenues rose 14 per cent to £190.2m, to emphasise the LSE’s strength as an independent company.

The 100 or so LSE shareholders at the meeting expressed sympathy and support for the board. One compared the deal to BHP Billiton’s unsuccessful bid for Canada’s Potash Corp, which authorities vetoed over concerns that it would place critical national infrastructure in foreign hands.

But Gibson-Smith ducked their questions on the likelihood of it merging with US rival Nasdaq or another regional exchange such as the Hong Kong Exchange.

“We weren’t successful with TMX but there will be other deals in the future, and we are still actually thinking about other deals we could do,” he said. “But you will have to wait and see what happens.”

LSE chief executive Xavier Rolet also refused to tell reporters if he had spoken with Nasdaq head Robert Greifeld recently, or if he planned to meet Greifeld when he visited the UK next week.

The LSE will be granted a C$10m (£6.5m) break fee from TMX for failing to meet its side of the deal – and if it merges with Canadian bank consortium Maple Group within a certain period, TMX will have to pay a further C$25m fee.

Quarterly revenues at the LSE were boosted by a 58 per cent jump in post-trade services as net treasury income from its Italian central counterparty (CCP) clearing service surged more than four times to £25.8m.

JP Morgan Cazenove analyst Rae Maile said CCP income had tripled over the past year and was expected to stay strong, raising the LSE’s earnings potential.

Primary markets income also rose 22 per cent compared with the same quarter in 2010.