LSE to Return Extra 250 Million Pounds to Shareholders
The London Stock Exchange unveiled plans to return as much as another 250 million pounds ($492 million) to investors as it seeks to persuade them to reject a hostile offer from U.S. rival Nasdaq .
The LSE also issued a bullish forecast for its SETS electronic trading system on Thursday, saying it expected the average number of trades per day on the platform to leap 180% to 480,000 in its 2008 financial year.
Europe's biggest stock market is battling a hostile 1,243-pence-a-share cash offer from Nasdaq, which already owns just under 30% of the London exchange operator. Nasdaq's bid values the LSE at 2.7 billion pounds.
"The board ... continues to recommend strongly that ... shareholders reject Nasdaq's wholly inadequate offer," the LSE said in a circular to shareholders.
Consolidation is picking up among the world's stock exchanges as they come under pressure from customers to offer global services and cut fees. Competition is also becoming more intense, with a group of investment banks planning to create a pan-European equity trading platform this year.
The LSE has long been viewed as a takeover target, in part because of its relatively small market capitalisation compared with rivals. Its shares have more than trebled over the past two years as it has received and rejected a string of offers.
The exchange operator has already returned cash to shareholders to head off a previous bid from Australia's Macquarie Bank. Sources familiar with the matter told Reuters last week it was planning a further share buyback programme.
In response to growing competition, the LSE announced plans on Wednesday to cut tariffs.
"Today's revised SETS forecast, together with the recently announced tariff changes, support a compelling value creation story," Chief Executive Clara Furse said in the circular.
LSE shares closed at 1,311 pence on Wednesday, signalling some investors expect a higher offer than Nasdaq's current bid.