LSE makes new bid for Clearnet

LONDON Stock Exchange yesterday submitted a new proposal to buy a majority stake in clearing house LCH.Clearnet, just 364 days after its first recommended offer was announced.

The deadline on the torturous takeover process has been repeatedly extended as both sides grappled with recently announced European regulatory requirements that will force clearing houses to hold substantially more capital.

Under yesterday’s agreement LSE will pay €351m (£303m) to increase its existing 2.3 per cent stake in LCH.Clearnet to 58 per cent, before contributing a further €185m towards a capital raising. Subject to regulatory approval the deal could complete in June.

Ian Axe, chief executive of LCH.Clearnet, said he sees “significant revenue opportunities opening up” in the future as regulators demand new tools to manage market risk.

Stock exchanges across the world have been keen to expand into other services as equity trading volumes decline. At the same time regulators have been pushing firms to make greater use of clearing houses, which ensure deals are completed even if one party defaults.

ADVISERS

MORGAN STANLEY
JP MORGAN

The long-suffering advisers on London Stock Exchange Group’s takeover of clearing house LCH.Clearnet have seen a lot of changes since the deal was first announced almost a year ago.

Back on 9 March 2012 the bourse’s recommend offer to take a majority stake in the clearing house business appeared to be straightforward. However it has taken an entire year – and four deadline extensions – to arrive at yesterday’s revised proposal.

Throughout the entire period London Stock Exchange’s team has been led by Morgan Stanley’s Matthew Jarman and Max Mesny.

LCH.Clearnet’s have stuck with JP Morgan’s Jeremy Capstick – a former Morgan Stanley banker – and Giuseppe Esposito. When not working on this deal Esposito helped BNP Paribas offload its Egyptian business to Dubai Bank in a $500m deal at the tail-end of last year.

Citigate Dewe Rogerson’s Patrick Donovan and Grant Ringshaw continue to handle the external communications for the stock exchange, while Brunswick’s Andrew Garfield and Elvira Pignal do the same job for LCH.Clearnet.