US Predator Seals Funds For £10bn LSE Bid

The owner of the New York Stock Exchange (NYSE) has secured funding from a group of American and Asian banks as it prepares a £10bn takeover bid for the London Stock Exchange (Other OTC: LDNXF - news) (LSE).

Sky News has learnt that InterContinental Exchange (NYSE: ICE - news) (ICE) has reached agreement with Morgan Stanley (Xetra: 885836 - news) , Wells Fargo (Hanover: NWT.HA - news) and Japan’s Mitsubishi UFJ to provide part of the debt that will be required to finance an offer for the LSE Group.

Other lenders are expected to be added to the syndicate in the coming weeks as ICE finalises the terms of a proposal, insiders said on Monday.

ICE has been examining a bid for the LSE since the UK-based financial infrastructure group said in February that it was in talks about a £21bn merger with Deutsche Boerse (LSE: 0H3T.L - news) , its German counterpart.

The NYSE’s owner said at the time that it had yet to approach the LSE’s board, although it is now understood to have done so in order to obtain detailed information about the London exchange’s finances.

An ICE spokeswoman declined to comment on its plans.

A deal between the NYSE’s owner and the LSE would create a transatlantic powerhouse in exchanges and clearing, uniting arguably the world’s two most prestigious venues for share listings.

However, a transaction appears to face robust opposition from the board of the LSE Group.

Its chief executive, Xavier Rolet, who stands to make more than £10m from any change of control of the LSE, warned that ICE’s track record would not inspire faith in its willingness to invest in the business.

Mr Rolet, who has done a stellar job for investors since taking the helm of the LSE in 2010, told The Sunday Telegraph: “I don’t want just anyone, particularly not some 'slash and burn’-type organisation, to come in and kill all of the stuff we’ve done over the last few years.”

A source close to ICE dismissed Mr Rolet’s remarks as being without foundation.

The prospective shake-up in the ownership of some of the biggest components of global financial market infrastructure is taking shape even as the UK prepares to vote on whether to remain a member of the European Union (EU).

The LSE and Deutsche Boerse have formed a ‘referendum committee’ to assess the implications of Brexit, but have vowed to press ahead with the merger regardless of whether the UK leaves the EU.

They have yet to confirm dates for shareholder meetings to approve their deal, but they are likely to take place in June at the earliest, meaning that ICE still has a considerable period of time before it is required to finalise its offer.

The Economist newspaper has departed from its typically free market stance by calling for the LSE’s merger with Deutsche Boerse to be blocked by regulators, while Lord Davies, the former trade minister, has argued that it should be the subject of a public interest test, underlining the sensitivity of the deal.

Badged as a ‘merger of equals’, Deutsche Boerse’s shareholders would earn a larger proportion of the combined group but Mr Rolet pointed out that the German company already had more British-based than domestic investors.