LSE takeover still deadlocked

London Stock Exchange (LSE) management has again rejected Australian bank Macquarie's takeover bid, which was unchanged from the original offer earlier this month.

Macquarie offered 580p per share, which values the exchange at £1.5 billion. But the exchange's management, encouraging shareholders to reject the offer, said that it undervalued the exchange significantly.

In a statement to shareholders, the LSE repeated its description of the offer as "derisory". The offer valued the LSE at 18.9 times 2006 expected earnings. However, other European exchanges trade at higher multiples, and the LSE argues that it has historically traded at a premium to other exchanges, rather than a discount. LSE shares closed yesterday at 620p.

In an attempt to discourage stockholders from backing a hostile takeover, the LSE also promised a £250 million capital return, to be followed by a share buyback scheme.

Macquarie originally made its offer on December 9, and met with rapid rejection from LSE management.