LSE agrees to revised deal for LCH
Source: Agencies |
March 8, 2013, Friday
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Print Edition
Print Edition
LONDON Stock Exchange has agreed a revised 328 million-euro (US$426 million) cash offer to buy a majority stake in LCH Clearnet, in a long-delayed deal to boost the group's lucrative clearing and risk management business.
Under the recommended offer, the LSE said it wants to acquire up to a further 55.5 percent in LCH, which acts as a middle man in financial trades and guarantees to complete deals if one of the parties cannot.
Regulators called for a shake-up in the amount of capital firms such as LCH must stockpile against their trading book shortly after LSE's original offer, sparking a year of renegotiating the deal.
The new offer is conditional upon the execution of a 320 million euro capital raising, which the LSE has pledged to support with a further 185 million euros of fresh investment.
LCH investors who consent to the deal will receive 15 euros per share, an offer that values the firm's issued share capital at 633 million euros.
"We will promote greater innovation, choice and competition in the risk management industry, especially in listed derivatives. This ...will build upon the successes we have already had with our existing equity and fixed income trading partnerships," LSE Chief Executive Xavier Rolet said.
LSE will then own up to 57.8 percent of the firm, including its current 2.3 percent stake, leaving other LCH shareholders with at most 42.2 percent.
LSE's maximum total investment in LCH following the fundraising will be 536 million euros, including a deferred consideration of up to 23 million euros payable in 2017.
LSE's long pursuit of LCH reflects its ambition to expand post-trade services for clients as trading in listed and 'over the counter' derivatives thrives.
Volumes in global exchange traded derivatives measured by the number of contracts grew by 12 percent between 2000 and 2012, while volumes in global OTC derivatives measured by notional value grew by 17 percent.
Under the recommended offer, the LSE said it wants to acquire up to a further 55.5 percent in LCH, which acts as a middle man in financial trades and guarantees to complete deals if one of the parties cannot.
Regulators called for a shake-up in the amount of capital firms such as LCH must stockpile against their trading book shortly after LSE's original offer, sparking a year of renegotiating the deal.
The new offer is conditional upon the execution of a 320 million euro capital raising, which the LSE has pledged to support with a further 185 million euros of fresh investment.
LCH investors who consent to the deal will receive 15 euros per share, an offer that values the firm's issued share capital at 633 million euros.
"We will promote greater innovation, choice and competition in the risk management industry, especially in listed derivatives. This ...will build upon the successes we have already had with our existing equity and fixed income trading partnerships," LSE Chief Executive Xavier Rolet said.
LSE will then own up to 57.8 percent of the firm, including its current 2.3 percent stake, leaving other LCH shareholders with at most 42.2 percent.
LSE's maximum total investment in LCH following the fundraising will be 536 million euros, including a deferred consideration of up to 23 million euros payable in 2017.
LSE's long pursuit of LCH reflects its ambition to expand post-trade services for clients as trading in listed and 'over the counter' derivatives thrives.
Volumes in global exchange traded derivatives measured by the number of contracts grew by 12 percent between 2000 and 2012, while volumes in global OTC derivatives measured by notional value grew by 17 percent.
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