Offer Update

London Stock Exchange
19 October 2000




                          LONDON STOCK EXCHANGE PLC

The London Stock Exchange plc today publishes its third defence document in
response to OM Gruppen AB's bid to acquire the Company.

Don Cruickshank, Chairman of the London Stock Exchange, said:

'Despite the revised terms of OM's Offer, the Board of the London Stock
Exchange continues to advise its shareholders to reject the offer on the basis
that it represents inadequate value. For customers, OM's proposal still offers
no proven benefits.

'The third defence document sets out how the London Stock Exchange intends to
build its business from the strong foundations that already exist. Beyond
these initiatives, there are a number of important strategic issues on which
full consultation with our shareholders and customers is required before
longer-term decisions can be made about participation in European
rationalisation and the globalisation of capital markets. This consultation
process has already started on an informal basis. The more formal process,
centred around the Exchange Markets Group, will start as soon as the Offer
Period has ended.'

Building the business

The pre-requisite for future success is to sustain and build on the strengths
of the London Stock Exchange. Our immediate initiatives to build the business
are to:

  * Give greater focus to customer services;
  * Further internationalise the London Stock Exchange's services;
  * Continue to enhance market infrastructure; and
  * Implement an effective consultation process.



The third defence document highlights the following key points about the
London Stock Exchange and its future development



The London Stock Exchange will develop its business along three lines

  * Expanding its service offering, the London Stock Exchange will
      + Continue the development of its core trading systems through
        enhancements such as the UK central counterparty
      + Focus on services to support the retail community
      + Develop further information products for our customers
      + Support clearing and settlement services to increase the overall
        efficiency of the central market
  * Expanding its product range, the London Stock Exchange will
      + Develop further equity related products, such as 'extraMARK' with
        its existing Exchange Traded Funds
      + Evaluate other financial and non-financial products, including
        e-commerce and business-to-business areas
  * Expanding geographically, to build the business, the London Stock
    Exchange will
      + Develop AIM and techMARK as international markets
      + Develop a pan-European market for liquid equities
      + Increase the level and spread of remote membership
      + Continue to compete for global listings

The London Stock Exchange's reliable and efficient trading and information
systems will underpin all of these activities



Greater focus on customer services

  * The London Stock Exchange will build on its existing core competences,
    namely
      + Managing robust and reliable trading systems and services
      + Managing the delivery of technology
      + Developing well-regulated markets
      + Adopting innovative and flexible market structures and services
      + Establishing and developing strong brands
  * The London Stock Exchange will continue to invest in and develop
    services provided to the UK equity markets that are key to its customers
    to maintain and enhance order flows, price formation and liquidity
  * The London Stock Exchange will achieve this by:
      + Continuing to invest in the development of SETS and SEAQ, including
        capacity and network upgrades - to be implemented during 2001
      + Supporting the introduction of the UK central counterparty with
        London Clearing House and CRESTCo - due to be launched on 26 February
        2001
      + Developing additional services to meet the needs of specific sectors
        of our customer community - both domestic and international, through
        2001
  * A key objective for the London Stock Exchange is addressing the
    different interests of those customers seeking better, more cost effective
    services to support retail markets, both in the UK and internationally,
    and those customers seeking a broader European wholesale market

Developments for the retail community

  * The London Stock Exchange is therefore establishing a new Broker
    Services Group, headed by Chris Broad, to take specific responsibility for
    enhancing our services for the retail community
  * The Broker Services Group will be provided with dedicated financial and
    executive resources to pursue a range of specific initiatives



Pan-European market

  * The London Stock Exchange intends to work in close co-operation with the
    leading market participants to develop a pan-European market
      + The London Stock Exchange can create a pan-European market by
        admitting the leading European equities to trading on its existing
        systems
      + For such a pan-European market, the London Stock Exchange would
        extend its current arrangements with London Clearing House and CRESTCo
        to provide a central counterparty and clearing and settlement services


Information services

  * The London Stock Exchange already has a successful track-record in
    creating and distributing on-line information products tailored to the
    needs of its diverse customer base. It will continue to develop
    competitively priced information products that meet the needs of customers
    by
      + Developing information services for companies, allowing them greater
        access to information about the trading of their shares and for
        private client brokers, enabling them to meet the needs of their
        customers
      + Enhancing its systems capacity and networks to allow further
        extension of the reach and scale of access to its information services
      + Evaluating ways to generate additional revenues from third parties
        using capacity in its systems and networks to support their activities



Further internationalisation of services

  * The London Stock Exchange already has, in techMARK and AIM, the largest
    growth / technology market in Europe
      + techMARK and AIM, in aggregate, include 668 companies
      + techMARK and AIM, in aggregate, have more than twice the number of
        companies than on the next largest European growth / technology market
  * The London Stock Exchange is committing to reposition techMARK and AIM
    as international markets by
      + Increasing promotional spend significantly
      + Competing for new members and issuers from other European
        jurisdictions
      + Continuing to compete outside Europe for issuers, building on
        existing successes
      + Providing broader trading access to the London market for non-UK
        brokers
  * The London Stock Exchange is developing plans, including the
    identification of priority overseas markets, to promote its established
    international position through further investment



Continuing to enhance market infrastructure

  * UK central counterparty
      + This initiative to introduce a central counterparty is scheduled for
        26 February 2001
  * Stamp Duty
      + The London Stock Exchange will continue to lobby the UK Government
        for the abolition of stamp duty
  * Dematerialisation
      + The London Stock Exchange believes that dematerialisation is a
        critical factor in the effective and efficient operation of a cohesive
        market structure and will work with the UK Government, CRESTCo,
        APCIMS, intermediaries and market users to ensure its wider adoption



Technology - the London Stock Exchange already offers its customers efficient,
reliable and scaleable systems

  * Since 1994, the London Stock Exchange has invested over £185 million as
    part of its long-term investment programme in technology
  * The London Stock Exchange is continuing to invest in trading systems to
    increase capacity and functionality and, as part of its long-term
    investment programme, will double its existing trading capacity and
    enhance its data network
  * The London Stock Exchange is also developing its established
    relationships with leading international information vendors to provide
    remote access to its trading systems
  * The London Stock Exchange may also consider partnerships or joint
    venture arrangements which enhance its delivery capability, particularly
    in technology



Effective consultation process - the London Stock Exchange aims to provide
efficient markets for all its customers: whether domestic or international,
wholesale or retail, issuers, intermediaries and investors

  * The London Stock Exchange believes that the diversity of markets is a
    key element of London's strength as Europe's leading financial centre and
    means there is a need for consultation to ensure the London Stock Exchange
    can meet the needs of this diverse customer base
  * The London Stock Exchange's formal consultation process will be based on
    a new structure which will have at its core the Exchange Markets Group
    ('EMG'). EMG will be chaired by Don Cruickshank
  * Representation on EMG will be drawn broadly from the market as a whole,
    including retail brokers, investment banks, corporate advisers, investing
    institutions, issuers and other key groups
  * The London Stock Exchange's new consultation process is designed to
    ensure that strategic initiatives reflects the needs of customers and
    shareholders



Balance sheet strength, property strategy and intentions on listing

  * The London Stock Exchange believes that as it develops following
    demutualisation it is appropriate, in line with other international stock
    exchanges, to maintain a strong balance sheet with significant cash
    balances in particular to maximise strategic flexibility during the
    current period of unprecedented change
  * If circumstances change, the London Stock Exchange will consider
    appropriate uses for its net cash balances in the best interests of
    shareholders
  * The London Stock Exchange intends to vacate the Exchange Tower and
    relocate to new corporate headquarters by the end of 2004 at the latest,
    which has been selected to coincide with the break options and expiry
    dates of existing leases
  * The London Stock Exchange's immediate priority is to focus on building
    the business but it nevertheless envisages moving to a full listing in due
    course and will keep the timing of any such move under review



OM's inadequacies for shareholders and customers

  * OM's revised offer provides London Stock Exchange Shareholders with two
    unattractive alternatives
      + EITHER:      even more new OM shares of uncertain value
      + OR:           some cash and even less influence
  * Under OM's Majority Cash Alternative, London Stock Exchange
    Shareholders, in aggregate, are being offered only 14.9% of OM's enlarged
    fully diluted share capital before the rights issue
  * OM intends to dilute further the interests of London Stock Exchange
    Shareholders by launching a rights issue to raise up to £594 million in
    which accepting London Stock Exchange Shareholders would not be entitled
    to participate
  * London Stock Exchange Shareholders are being asked to accept new OM
    shares of uncertain value but, as a result of the rights issue, will not
    know
      + The number of OM shares they will end up with
      + The percentage of OM's share capital they will own, although it
        could well be less than 14.9% in aggregate
      + The resulting capital structure of OM



OM's Offer - uncertainty, risk and loss of influence



For further information:

London Stock Exchange

Kay Dixon

Jeremy Hughes                           020 7797 1222

Schroder Salomon Smith Barney

Philip Robert-Tissot                    020 7986 4000

Brunswick

Derek Bainbridge

David Brewerton                         020 7404 5959



Schroder Salomon Smith Barney, which is regulated in the United Kingdom by The
Securities and Futures Authority Limited, is acting for London Stock Exchange
plc and no one else in connection with the offer by OM and will not be
responsible to anyone other than London Stock Exchange plc for providing the
protections afforded to its customers or for providing advice in relation to
the offer by OM. Schroder Salomon Smith Barney has approved this press release
for the purposes of Section 57 of the Financial Services Act 1986.