06 June 2006

Telegraph: Deutsche Börse adds up prospect of raised bid

The executive board of Deutsche Börse has met its financial advisers in an attempt to establish by how much it can raise its offer for pan-European stock exchange group Euronext. The board, led by chief executive Reto Francioni, met Deutsche Bank and corporate finance advisers Hawkpoint in Frankfurt last night. At the meeting, Mr Francioni is understood to have asked to see the results of financial sensitivities worked on by both advisers on how far it could increase its offer for Euronext.

The current proposal, which has been rejected by Euronext's board in favour of a rival approach from the New York Stock Exchange, would see Euronext investors receive 0.68 shares in an enlarged entity plus ԇ.72 in cash for each existing Euronext share. The cash element of the existing proposal, which would see its own shareholders receive a proportional cash payment, is worth about Ԃbn (£1.4bn).

Its annual report reveals the German exchange had cash of ԁbn at the end of 2005 and so is likely to have to tap the debt markets or conduct a rights issue if it is to increase the cash component of its proposal. It is also thought the meeting discussed the chance of support for a revived Deutsche Börse offer among its own and Euronext's shareholders.

Hedge fund TCI, which owns about 10pc of Deutsche Börse's shares and 8.5pc of Euronext's, has remained silent since Euronext's board signed a combination agreement with the NYSE on Thursday evening. In the past, Chris Hohn, who runs TCI, has spoken in favour of a merger between the two European exchanges.

But his position has weakened slightly after rival Atticus, which owns stakes in both as well as the NYSE, came out in support of the NYSE-Euronext tie-up. Mr Francioni was given a boost after BNP Paribas, which is working as an adviser to Euronext, reported that it is not sure whether to back the deal with the NYSE or not.

'BNP Paribas does not have a preference for one or other of the current merger proposals involving Euronext,' said a spokesman for the French bank, after a report alleging it was wholly against the NYSE deal.
By James Quinn

© Daily Telegraph