Exchange wars: London Stock Exchange shares plunge after American rival rules out bid to disrupt Deutsche Boerse merger
The Intercontinental Exchange (ICE) traded blows with the London Stock Exchange (LSE) today as it ended plans to bid for its UK rival.
ICE, which owns the New York Stock Exchange, blamed LSE executives for showing a “disappointing level of engagement”.
But the LSE hit back with a statement indicating it had played by the rules.
Read more: London Stock Exchange battle heats up
ICE's withdrawal of interest paves the way for LSE’s £21bn “merger of equals” with Germany's Deutsche Boerse.
LSE's share price today dropped by more than four per cent to 2,576p, while shares in ICE and Deutsche Boerse both went up on the news.
[stockChart code="LSE" date="2016-05-04 13:14"]
In an investor call today, following its first-quarter results, ICE attacked LSE executives for showing a “disappointing level of engagement [which] ultimately did not allow us to make a complete determination of the integration benefits and their related risks that ICE would require to support a bid”.
Read more: Third time lucky: LSE and Deutsche Boerse try again
Withdrawing from the bid earlier today, ICE said in a statement: "Following due diligence on the information made available, ICE determined that there was insufficient engagement to confirm the potential market and shareholder benefits of a strategic combination.
"Therefore, ICE has confirmed that it has no current intention to make an offer for LSEG."
But ICE "reserves the right to make or participate in an offer" for the LSE "within the next six months".
In an investor call, ICE elaborated on the reasons for its withdrawal of interest.
“We thought that the combination may have a compelling rationale," said Scott Hill, chief financial officer.
“Over the last year, members of our board and our advisers attempted unsuccessfully to arrange meetings through the LSE chairman to discuss these ideas. Then, following our public expression in March of interest under the UK takeover code, the LSE chairman and CEO did not engage with ICE.”
He said ICE continued to look into the prospect of a bid, but added: “The disappointing level of engagement of the LSE ultimately did not allow us to make a complete determination of the integration benefits and their related risks that ICE would require to support a bid.”
Read more: Stock exchange shareholders wait to learn date of merger vote
LSE said in a statement this afternoon: "ICE has been provided with information and had access to management under Rule 20.2 of the UK Takeover Code. However, at no time has ICE made an approach to LSEG with a possible proposal or details of any such possible proposal."
LSE chief executive Xavier Rolet has repeatedly spoken out in favour of his company's merger with Deutsche Boerse over a takeover from the US.
In an interview with Morning Wire, published shortly after it emerged that ICE was drawing up a bid, Rolet said: "I don’t want the LSE ever again to be on the receiving end of a hostile takeover."
London Stock Exchange-Deutsche Boerse merger timeline
23 February: LSE confirms it is in talks with Deutsche Boerse, marking the pair's third attempt in two decades to merge.
26 February: The companies announce LSE chief executive Xavier Rolet would depart in the event of a merger, with Deutsche Boerse's Carsten Kengeter taking charge. The merged stock exchange group would have its headquarters in London rather than Frankfurt.
1 March: Intercontinental Exchange confirms it is considering a bid for the LSE. Shares in the LSE shoot to a record high.
6 March: Chicago Mercantile Exchange (CME) is also reported to be considering an LSE bid.
16 March: LSE and Deutsche Boerse set out the terms of a £21bn "merger of equals".
4 April: Report suggests ICE has secured £10bn funding for its LSE takeover bid.
5 April: In an interview with Morning Wire, Rolet fires a warning shot at attempts from the US to disrupt the merger.
17 April: After criticism and statements from politicians in the UK and Germany, sources close to the LSE-Deutsche Boerse deal rule out the possibility of the merged company having its headquarters anywhere but London.
20 April: Reports suggest rival European stock exchange Euronext is considering options for how to block the deal.
30 April: Both the LSE and Deutsche Boerse are forced to retract or clarify statements made by executives about the deal and a possible bid for ICE.
4 May: ICE says it has "no current intention to make an offer" for the LSE.