Press releases 2005

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN

27 January 2005

ANNOUNCEMENT RE: DEUTSCHE BÖRSE'S PROPOSED PRE-CONDITIONAL OFFER

The Board of the London Stock Exchange notes the announcement by Deutsche Borse of a proposed pre-conditional cash offer for the London Stock Exchange of not less than 530 pence per share.

The Board believes firmly that this proposed pre-conditional cash offer does not recognise the inherent value in the London Stock Exchange's business, the related synergies available in a combination and the attractive growth prospects that the London Stock Exchange enjoys under its existing management team.

The London Stock Exchange has demonstrated a clear strategy of delivering value for shareholders. Since its demutualisation and listing, the London Stock Exchange has delivered an excellent return for its shareholders by managing an efficient and focused exchange business. Through effective management, the London Stock Exchange has reduced its own and market-related costs and significantly improved efficiency. Its high quality, low cost services continue to drive growth in UK equity market business.

As announced today, third quarter results were good with gross turnover of £66.3 million, representing a 5 per cent increase over the same period last year. This was driven by strong increases in Broker Services (10 per cent) and Information Services (13 per cent). Market trends continue to look positive, with an increased number of equity bargains (281,000 per day and totalling £1.2 trillion), increased trading volumes on SETS and increasing new issue activity, particularly on AIM.

The London Stock Exchange's current prospects are strengthened by a number of cost and revenue initiatives to continue to grow the business and deliver value to shareholders and customers.

One of the London Stock Exchange's key commercial advantages is the superior quality and performance of its technology platform. The "technology roadmap" initiative involves the current migration from the existing IT platform onto next generation .NET technology. The Board believes that the "technology roadmap" provides an important step-change in the quality, functionality and scaleability of London Stock Exchange market services at significantly lower cost.

There are also a number of organic growth opportunities underway which should improve revenues significantly by 2008. These include further enhancements to the trading services product offering and a further diversification of our information services product lines. The London Stock Exchange will be communicating with its shareholders on these, and other new initiatives, in due course.

Whilst the Board of the London Stock Exchange is confident of the London Stock Exchange's strong growth prospects as an independent group, the Board believes that a combination, on the right terms, of the London Stock Exchange with another major stock exchange could be in the best interests of shareholders and customers.

A key additional aspect of the Board of the London Stock Exchange's consideration of any offer proposal is an evaluation of an offer's prospects of implementation given the requirement for regulatory approval. The Board of the London Stock Exchange is focused on ensuring that any proposal is capable of implementation.

In view of the terms of the offer proposal, the Board of the London Stock Exchange, which has been so advised by Merrill Lynch, rejects Deutsche Borse's pre-conditional offer. The London Stock Exchange's shareholders are advised to take no action.

The London Stock Exchange is willing to continue to hold discussions with Deutsche Borse and Euronext about the possibility of a significantly improved offer for the London Stock Exchange.

For further information, please contact:

The London Stock Exchange

John Wallace - Media +44 (0)20 7797 1222

Paul Froud - Investor Relations +44 (0)20 7797 3322

Merrill Lynch +44 (0)20 7628 1000

Matthew Greenburgh

Richard Slimmon

Media

Finsbury +44 (0)20 7251 3801

James Murgatroyd

Simon Moyse