Rejection of OM Approach
London Stock Exchange
25 August 2000
REJECTION OF APPROACH FROM OM GRUPPEN
The Board of the London Stock Exchange ('LSE') announces that it has received an
approach from the Swedish company, OM Gruppen AB ('OM'), regarding a possible
offer for the London Stock Exchange. The Board of the LSE, with the full support
of its financial advisers, Schroder Salomon Smith Barney and Merrill Lynch, has
no hesitation in rejecting this approach.
Following meetings yesterday and today between the LSE, OM and their respective
advisers, the Board of the LSE believes that OM's proposal is significantly less
attractive than the proposed merger with Deutsche Borse AG ('DBAG') in creating
benefits for customers and value for shareholders.
The proposal is considered to have no merit for two reasons:
* it constitutes an inferior business proposition, and
* it offers wholly inadequate value for shareholders.
Inferior business proposition
OM's proposal does not offer customers and shareholders the benefits provided by
the merger of LSE and DBAG to form iX-international exchanges.
No European consolidation
* It would not create a strong European presence that provides access to
liquidity in a wide range of equities. OM's equity market interests amount to
only 5 per cent of the Eurotop 300 by weighted market capitalisation. LSE's and
DBAG's equity market interests amount to 34 per cent and 12 per cent
respectively. iX-international exchanges is in discussion with other exchanges
to broaden this pool of liquidity and further remove duplicate structures and
market complexity.
* It would not provide a strong position in the European derivatives market.
OM's position in the derivatives market lags that of Eurex (Germany/
Switzerland), Liffe (UK), Matif and Monep (France) and AEX (Netherlands).
Lower cost savings
* OM said that it expects to achieve lower cost savings to those achievable from
the alternative combination with DBAG, but was unable to quantify either these
or any other benefits.
The Board believes that a collaborative approach to restructuring financial
markets, as proposed by the LSE and DBAG, remains the best way to reduce
complexity and cost for customers and to deliver value for shareholders.
Wholly inadequate value
Derisory offer
OM proposed an offer comprising £20 in new OM shares and £7 in cash for each LSE
share. The last traded price for the LSE's shares was £23.50 at close of
business on 25 August.
Commenting, Don Cruickshank, Chairman of the London Stock Exchange, said today:
' We have no hesitation in rejecting OM's approach which we believe is
significantly less attractive than our proposed merger with Deutsche Borse to
create iX-international exchanges. For our shareholders, the offer value is
derisory. For our customers, the proposal fails to provide the benefits which
will arise from achieving critical mass in European securities.
'We urge our shareholders and our customers not to be distracted by this
approach which amounts to no more than a competitive spoiling tactic. We
continue to urge our shareholders to support the Board and vote for the proposed
merger with Deutsche Borse at the meetings on 14 September.'
Press enquiries
London Stock Exchange
Kay Dixon 020 7797 1000
Schroder Salomon Smith Barney
Philip Robert-Tissot 020 7986 4000
Merrill Lynch
Kevin Smith 020 7628 1000
Brunswick
Derek Bainbridge 020 7404 5959
Schroder Salomon Smith Barney and Merrill Lynch, which are regulated in the
United Kingdom by The Securities and Futures Authority Limited, are acting for
London Stock Exchange plc and no one else in connection with the approach by OM
and will not be responsible to anyone other than London Stock Exchange plc for
providing the protections afforded to their respective customers or for
providing advice in relation to the approach.
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