ICE Confirms It May Bid for LSE Group, Sending Shares to Record 

• Intercontinental Exchange said to work with Morgan Stanley
• U.S. firm said to see room to outbid German rival despite risk

Intercontinental Exchange Inc. said it is considering making an offer for London Stock Exchange Group Plc, a week after Deutsche Boerse AG said it was in merger talks with the U.K. company.

ICE said in a statement that it hasn’t taken a final decision on whether to make an offer, nor has it approached LSE’s board about doing a deal. The announcement propelled LSE’s shares to a record high, up 8 percent as of 8:50 a.m. in London.

“There can be no certainty that any offer will be made, nor as to the terms on which any offer will be made,” ICE said in the statement.

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, according to people familiar with the matter, who asked not to be identified because talks are private.

While the U.S. 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 offer, one of the people said.

CME Group Inc. is also working with advisers to assess whether it could challenge the deal, separate people familiar with the matter said. While a counterbid for LSE is the most likely option that CME is studying, discussions are at an early stage and the Chicago-based exchange may choose not to proceed, they said.

Takeover Deadline

ICE is unlikely to make a move before the March 22 U.K. takeover deadline for Deutsche Boerse to make a formal offer for LSE, one of the people said.

Representatives LSE, Morgan Stanley and CME declined to comment. A representative 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 $5.2 billion acquisition of Interactive Data Holdings Corp.

ICE also is no stranger to unsolicited offers for competitors. In 2007, the Chicago Mercantile Exchange prevailed in its quest to buy the Chicago Board of Trade over an unsolicited $11.8 billion offer from ICE. Kelly Loeffler, an Intercontinental executive and Sprecher’s wife, paid a bellboy at the Boca Raton Resort & Club to slip the CBOT proposal under the doors of Charles Carey and Bernard Dan, the chairman and CEO of CBOT, at 6:45 a.m. that morning, a person with direct knowledge of the matter said in 2012. The ICE counteroffer forced the Chicago Merc to improve its bid three times.

Deutsche Boerse and LSE last week announced plans to combine and create a global player worth at least 20 billion pounds ($28 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.

Source: Bloomberg

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