LCH.Clearnet Shareholders Back $618 Million LSE Merger
LCH.Clearnet Group Ltd. shareholders backed the clearinghouse’s proposal to sell a majority stake to London Stock Exchange Group Plc (LSE), Europe’s oldest independent bourse, for 463 million euros ($618 million).
LCH.Clearnet said 94.4 percent of votes cast by investors at a meeting in London today were in favor of the merger. LSE said 99.9 percent of shareholders agreed to the deal at a separate meeting in the U.K. capital.
LCH.Clearnet appointed Ian Axe as chief executive officer last April to revamp the London-based company after losing two CEOs in less than six years. LCH.Clearnet, whose SwapClear service began clearing interest-rate contracts traded between banks in 1999, has seen its market share in equities eroded by new entrants even as regulators mandated more clearing to reduce financial risk.
The result today shows “great support, support from the market,” Axe said after the vote today. “We plan to be instrumental in where the financial markets are moving.”
LCH.Clearnet attracted interest from Nasdaq OMX Group Inc. (NDAQ) and NYSE Euronext (NYX) before agreeing to the LSE bid last month. The firms intend to complete the transaction by the fourth quarter and the deal needs to be cleared by antitrust authorities.
Clearinghouses operate as central counterparties for every buy and sell order executed by their members, who post collateral, reducing the threat from a trader’s default. They have become more attractive as regulators seek more central clearing of derivatives.
NYSE Euronext, the owner of the New York Stock Exchange, has a stake of about 9.1 percent in LCH.Clearnet and plans to stop using the venue to clear European securities and derivatives in 2013. LCH.Clearnet’s revenue from those activities was 98 million euros in 2011, not including 35.5 million euros from NYSE’s London-based Liffe derivatives business.
LCH.Clearnet shareholders, which include banks and brokers that use its services, will retain at least 40 percent ownership. The LSE offer values LCH.Clearnet at 813 million euros, according to a March 9 statement. Shareholders of LCH.Clearnet will get 19 euros a share in cash plus 1 euro a share from a special dividend.
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