ICE lining up financing for LSE bidding war

  • Business
  • Thursday, 10 Mar 2016

LONDON: Intercontinental Exchange Inc (ICE) is lining up financing for a bid for the London Stock Exchange Group Plc (LSE), according to people familiar with the matter, as it prepares to go head to head with Deutsche Boerse AG to win control of the UK company.

ICE, which is working with Morgan Stanley and Moelis & Co to explore a takeover of LSE, is in discussions with banks to fund a formal offer in the coming weeks, the people said, asking not to be identified as the deliberations are private.

Talks are at an early stage, no final decision has been made on the timing or size of the bid, and ICE could still decide against an offer, they said.

Deutsche Boerse and LSE on Feb 23 announced talks to combine and create a global player worth at least £20bil, which could better compete with ICE as well as CME Group Inc, the world's largest derivatives market.

A formal proposal from ICE or Deutsche Boerse could spark a bidding war between the suitors, which each have until late March to make an official offer for the bourse under the UK's takeover rules.

Deutsche Boerse is likely to announce the details of a merger plan with LSE as early as next week, according to a different person familiar with the matter.

ICE, which sees the potential to generate more cost savings with LSE than Deutsche Boerse, is likely to wait until after the German’s bid, one of the people said.

CME Group is also working with advisers to assess whether it could challenge the deal, people familiar with the matter said last week.

Representatives for ICE and LSE declined to comment. An official for Deutsche Boerse didn’t immediately respond to requests for comment.

LSE's shares were little changed at 2,837 pence at 9.06am in London. The stock soared to a record 2,893 pence on March 3. Deutsche Boerse was also little changed yesterday at 75.10 euros.

As ICE hashes out its strategy, options under review include shifting its legal address to the UK to take advantage of lower tax rates, separate people familiar with the matter said. Because of the cost savings associated with such a move – known as a tax inversion -– ICE would then have more flexibility to make a higher offer, said the people, who asked not to be identified because talks are private.

While the Atlanta-based company is discussing the feasibility of the step, ICE isn’t currently planning an inversion and may decide against it, the people said.

The potential political pushback in the US, especially during an election year, is one reason it may choose not to pursue the tax-saving deal, the people said.

ICE also owns the US' best-known bourse, the New York Stock Exchange, which could make a move abroad to cut taxes particularly controversial. – Bloomberg

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