LSE Boosts Dividend as Takeover by Deutsche Boerse Crumbles

Updated on
  • CEO Xavier Rolet says his retirement has been ‘postponed’
  • Company expects European Commission decision by April 3

London Stock Exchange Group Plc said it raised its full-year dividend 20 percent, a potential reward for shareholders reckoning with the likely collapse of Deutsche Boerse AG’s planned takeover of the company.

The exchange shocked investors Sunday by saying the $13 billion deal was unlikely to proceed because it wouldn’t comply with a divestment sought by competition watchdogs. As that plan falters, Chief Executive Officer Xavier Rolet said the company would continue to seek acquisitions and has grown its market share, even with the official trigger for the Brexit process less than a month away.

“There isn’t a sort of plan B, C, D or E,” Rolet said in conference call after reporting a gain in full year earnings. The company has continued making deals during the past year, such as the November purchase for its index business. “It’s just a continuation of our strategy,” he said.

LSE said it awaits the outcome of the European Commission review process for the Deutsche Boerse transaction on or before April 3.

The likely demise of the Anglo-German tie-up has stirred questions about whether Rolet will remain with the company, as he was due to step down if the deal succeeded. LSE’s board said Sunday it still has faith in Rolet and his management team. The shares have risen nearly five-fold during Rolet’s tenure.

“It looks like my retirement has been postponed,” Rolet said on the call.

LSE said that it couldn’t sell its stake in MTS, an electronic trading platform for government bonds in Italy, and declined to submit a counter proposal after European Union officials made divesting the unit a condition for approval.

“The commission’s very recent request for the group to divest MTS, a systemically important regulated business that sits at the heart of our Italian operations, put us indeed in a very difficult situation,” Rolet said Friday.

LSE boosted its annual dividend to 43.2 pence per share, a 20 percent gain. Total income rose 17 percent in 2016 to 1.7 billion pounds ($2 billion), the company said.

(Updates with CEO comments throughout.)
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