ICE said to explore rival bid for LSE to thwart Deutsche Boerse

[LONDON] Intercontinental Exchange Inc is exploring a counter bid for London Stock Exchange Group Plc, according to people familiar with the matter, attempting to scuttle a planned merger with Deutsche Boerse AG that would create the dominant European exchange operator.

ICE, which is based in Atlanta and owns the New York Stock Exchange, is working with advisers including Morgan Stanley to prepare a possible higher offer for LSE, said the people, who asked not to be identified because talks are private.

While the US firm is aware it may face political and corporate pushback if it tries to break up the European marriage, ICE has concluded that LSE shareholders can be persuaded by a higher offer, the people said. At the least, a counterbid could force Deutsche Boerse to increase its bid, one of the people said.

ICE is unlikely to make a move before the March 22 UK takeover deadline for Deutsche Boerse to make a formal offer for LSE, one of the people said. No final decision has been made and ICE could decide against proceeding with a bid, they said.

Representatives for ICE, LSE and Morgan Stanley declined to comment. Representatives for Deutsche Boerse didn't immediately respond to requests for comment.

The exchange business is rife with acquisitions. ICE, led by Chief Executive Officer Jeff Sprecher, became a global powerhouse in part through its dealmaking, such as the 2013 purchase of NYSE Euronext, which gave it a derivatives business called Liffe. And in October, Sprecher expanded its data services business with the US$5.2 billion acquisition of Interactive Data Holdings Corp.

Deutsche Boerse and LSE last week announced plans to combine and create a global player worth at least 20 billion pounds (S$39 billion), which could better compete with ICE as well as CME Group Inc, the world's largest derivatives market. A German-British merger could also give customers a one-stop shop for primary markets in London, Frankfurt and Milan, as well as access to a pan-European stock venue called Turquoise. The transaction would also gather the Euro Stoxx 50 Index, the most valuable equity benchmark in Europe, and FTSE Russell's portfolio of indexes under the same roof.

BLOOMBERG