The London Stock Exchange.  Picture: REUTERS
The London Stock Exchange. Picture: REUTERS

LONDON — Intercontinental Exchange (ICE) is exploring a counter bid for London Stock Exchange (LSE) Group, according to people familiar with the matter, attempting to scupper a planned merger with Deutsche Boerse that would create the dominant European exchange operator.

ICE, which is based in Atlanta and owns the New York Stock Exchange, is working with advisers including Morgan Stanley to prepare a possible higher offer for the LSE, said the people, who asked not to be identified because talks were private.

While the US firm was aware it could face political and corporate pushback if it tried to break up the European marriage, ICE had concluded that LSE shareholders could be persuaded by a higher offer, the people said. At the least, a counterbid could force Deutsche Boerse to increase its bid, one of the people said.

ICE is unlikely to make a move before the March 22 UK takeover deadline for Deutsche Boerse to make a formal offer for LSE, one of the people said. No final decision had been made and ICE could decide against proceeding with a bid, they said.

Representatives for ICE, LSE and Morgan Stanley declined to comment. Representatives for Deutsche Boerse did not immediately respond to requests for comment.

Exchange deal making

The exchange business is rife with acquisitions. ICE, led by CEO Jeff Sprecher, became a global powerhouse in part through its deal making, such as the 2013 purchase of NYSE Euronext, which gave it a derivatives business called Liffe. And in October, Mr Sprecher expanded its data-services business with the $5.2bn acquisition of Interactive Data Holdings.

ICE also is no stranger to unsolicited offers for competitors. In 2007, the Chicago Mercantile Exchange prevailed in its quest to buy the Chicago Board of Trade over an unsolicited $11.8bn offer from ICE. 

Kelly Loeffler, an Intercontinental executive and Mr Sprecher’s wife, paid a bellboy at the Boca Raton Resort and Club to slip the Chicago Board of Trade proposal under the doors of Charles Carey and Bernard Dan, the chairman and CEO of the Chicago Board of Trade at 6:45am that morning, a person with direct knowledge of the matter said in 2012. The ICE counteroffer forced the Chicago Merc to improve its bid three times.

Deutsche Boerse and LSE last week announced plans to combine and create a global player worth at least £20bn ($28bn), which could better compete with ICE as well as CME Group, the world’s largest derivatives market.

A German-British merger could also give customers a one-stop shop for primary markets in London, Frankfurt and Milan, as well as access to a pan-European stock venue called Turquoise.

The transaction would also gather the Euro Stoxx 50 index, the most valuable equity benchmark in Europe, and FTSE Russell’s portfolio of indices under the same roof.