The London Stock Exchange Group said on Friday that it had agreed to buy a majority 60-percent stake in British clearing house LCH.Clearnet for 463 million euros ($613 million) in cash. LSEG, which owns the London and Milan stock exchanges, had been in exclusive talks with LCH.Clearnet since last September, shortly after the LSEG had failed in its bid to acquire TMX Group, owner of the Toronto exchange.
Clearing houses play a key role in the transaction of shares between two parties, charging clients a fee to guarantee deals should one side default. "LCH.Clearnet Group Limited and London Stock Exchange Group plc today announce that they have reached agreement on the terms of a recommended cash offer," said a statement issued by the groups.
"On completion, LSEG will become the majority owner of LCH.Clearnet, holding up to 60 percent of LCH.Clearnet''s issued share capital." LSEG chief executive Xavier Rolet described the deal as "transformative, delivering a strong, customer-focused clearing partnership between LSEG, LCH.Clearnet and our customers, the broker-dealer community."
LCH.Clearnet chief executive Ian Axe said he saw "significant revenue opportunities opening up as a result of both customer and regulatory demand for more efficient and more sophisticated tools to manage market risk." Under the terms of the deal which the companies aim to complete by the final quarter of 2012, LCH.Clearnet shareholders will receive 20 euros for each share they sell. LSEG shares surged 7.96 percent to stand at 969.5 pence following the announcement and approaching midday on London''s second-tier index of 250 traded international companies, which was up 0.55 percent overall.
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