Activist Fund TCI Backs German Takeover of London Stock Exchange

  • Der Spiegel reports TCI backs LSE-Deutsche Boerse combination
  • Fund helped thwart Deutsche Boerse’s 2005 attempt to buy LSE

Activist investor TCI Fund Management supports Deutsche Boerse AG’s proposed takeover of London Stock Exchange Group Plc, clarifying the motives behind the fund’s purchase of a sizable stake in the British company.

“We support it,” Christopher Hohn, the founder of TCI, told the German magazine Der Spiegel. “The management of the new company will be more strongly leaning towards the Anglo-Saxon model.”

Hohn’s comments address speculation that TCI could use its 4.25 percent stake in LSE to agitate for a higher price. The holding makes the hedge fund the sixth-largest shareholder in LSE. In a letter to investors, Hohn said he is confident that both managements will “bend over backwards” to get regulatory approval for the deal, Reuters reported earlier this week.

TCI hasn’t always viewed a tie-up between Deutsche Boerse and LSE so positively. The firm, along with another activist fund, helped force Deutsche Boerse to drop its 2005 offer to buy LSE, ousting the German company’s chairman and chief executive officer in the process.

Hohn is also an investor in Volkswagen AG, which he has slammed for what he deems excessive executive pay. In the Der Spiegel article, Hohn also criticized the German approach to corporate governance. If Germany fails to modernize its corporate governance model, “the one or other German company will become a takeover target,” he told the magazine.

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