Top London Stock Exchange Group (LSE) activist investor Sir Chris Hohn says takeover from US rivals is on the cards
The hedge fund manager who pushed for the removal of the chair of the London Stock Exchange last year believes the firm is ripe for a US takeover, according to reports.
Sir Chris Hohn, manager of The Children’s Investment Fund (TCI), told investors that consolidation in the exchanges sector was inevitable, according to Sky News.
Hohn reportedly said that a bid from US financial infrastructure giants CME Group or the Intercontinental Exchange (Ice) was increasingly likely, adding that the LSE should try to replicate its strength in clearing derivatives to foreign exchange.
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Shares in the LSE Group surged by almost five per cent after the reports to hit their highest point since mid-December.
The speculation by a top investor comes with the LSE still in the process of interviewing potential new chief executives. The former boss, Xavier Rolet, was forced out by the board at the end of last year, attracting the ire of Hohn, who waged an activist campaign to retain him and remove LSE chair Donald Brydon.
A move by one of the large US exchanges has been rumoured for almost two years, since talks between Deutsche Boerse and the LSE over a failed merger began.
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A merger between the two European firms would have created a giant almost certainly capable of fending off attempts to buy it from the US. However, the deal fell through in March last year after EU competition authorities said they objected, with Brexit thought to have played a role as well.
Analysts told City A.M. a bid from Ice would be the more viable of the two massive US exchanges, although any purchase attempt could be delayed until further clarity over Brexit is achieved.
The LSE’s prospects are intimately tied to the Brexit deal because of political concerns over the future of clearing of euro-denominated derivatives. Some European politicians have expressed a desire to pull euro-clearing, dominated by LSE’s LCH, into the EU after Brexit.
The LSE, CME Group, and Ice declined to comment.
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