Press releases 2000

12 September 2000

LSE TO FOCUS ON DEFEATING OM BID - iX MERGER PROPOSAL WITHDRAWN

The Board of the London Stock Exchange plc (LSE) announces that it has today decided to withdraw its merger plan with Deutsche Brse, in order to focus attention wholly on the inadequacies for shareholders and customers of the hostile bid from OM Gruppen (OM).

In proposing the merger, the Board was seeking to ensure that the LSE could play a leading role in the consolidation of European exchanges and globally through the proposed link with NASDAQ. The Board was well aware that such an ambitious plan required a number of issues to be resolved, some of which were outside the LSE's control. It is clear from the shareholder, customer and regulatory issues raised, which the Board has sought to reconcile, that it is not possible to pursue this proposal in parallel with a bid defence under a Takeover Code timetable.

The Board remains of the view that cross-border consolidation of European exchanges, leading to an enlarged pool of liquidity and catalysing essential cost reductions in clearing and settlement, is in the interests of investors, issuers, intermediaries and shareholders. The Board believes that in considering any takeover proposal its shareholders, in their role as customers, would need to be satisfied that their businesses would not be damaged by a change of control of LSE. In addition, shareholders would need to see a full price to justify surrendering control of such a valuable business. It is quite clear that the OM offer fails totally on both of these counts.

Don Cruickshank, Chairman of the LSE, said: "Not enough of the issues raised by crossborder consolidation have been resolved, and there is now too little time to build confidence that they would be resolved if the merger went ahead. There is very real value in the LSE, even though it has had so few months of life as a commercial for-profit company. When the OM offer has been seen off, the Board, in full consultation with shareholders and customers, will review the means by which London's pre-eminent role in European equities trading can best be promoted in both their interests."

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Schroder Salomon Smith Barney and Merrill Lynch, which are regulated in the United Kingdom by The Securities and Futures Authority Limited, are acting for London Stock Exchange plc and no one else in connection with the offer by OM and will not be responsible to anyone other than London Stock Exchange plc for providing the protections afforded to their respective customers or for providing advice in relation to the offer.