Press releases 2006
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17 February 2006
Exchange posts second Shareholder Circular
The Board of London Stock Exchange plc is today posting a shareholder circular (“circular”) in response to Macquarie’s offer. The circular summarises the Exchange’s forecasts for strong SETS growth with the average number of trades per day expected to grow by at least 100 per cent by financial year 2008, underlining structural changes in the pattern of equity trading, and also outlines a number of value enhancements. These include:
• doubling the previously announced capital return to £510 million – 200p per share;
• commencing a share buyback programme of up to £50 million per annum following the capital return; and
• raising the total FY 2006 dividend 71 per cent to 12p.
The Circular also provides details of cost efficiencies following a period of continuing investment in infrastructure and technology.
Chris Gibson-Smith, Chairman of the London Stock Exchange, commented:
"The London Stock Exchange has a unique strategic position and an exceptional customer franchise. Our continued strong trading performance is delivering excellent financial results, which enables us to announce an increased capital return and significantly increased dividend. Macquarie's offer recognises none of this. It provides no value today and reflects no value tomorrow. Shareholders should continue to reject the offer."
The Board believes that the current share price does not fully reflect the stand-alone value of the Exchange given its established performance, let alone its prospects and the fact that its P/E multiple remains at a discount to its listed peers. The Board’s primary objective is to deliver superior shareholder returns from current share price levels. The Board is confident of achieving this objective.
The Directors of London Stock Exchange plc, who have been so advised by Merrill Lynch and Lehman Brothers, strongly recommend that Exchange shareholders continue to reject Macquarie’s ill-considered offer.
For further information:
London Stock Exchange John Wallace – Media 020 7797 1222
Paul Froud – Investor Relations 020 7797 3322
Lyndal Kennedy – Investor Relations 020 7797 3322
Merrill Lynch Matthew Greenburgh or Richard Slimmon 020 7628 1000
Lehman Brothers Anthony Fry or Stephen Fox 020 7102 1000
Finsbury James Murgatroyd or Simon Moyse 020 7251 3801
Today’s circular and the London Stock Exchange’s earlier shareholder circular of January 19 responding to Macquarie’s offer are available on: http://www.londonstockexchange-ir.com/lse/bid/key/
Sources and bases:
The reference to the average number of trades per day by financial year 2008 is relative to financial year 2005.
Implementation of the capital return is subject to London Stock Exchange no longer being in an Offer Period and subject to shareholder and court approval.
The reference to P/E multiple is based on December 2005 calendarised P/E multiples of major listed exchanges.
The Directors of the London Stock Exchange accept responsibility for the information contained in this announcement. To the best of the knowledge and belief of the Directors of the London Stock Exchange (who have taken all reasonable care to ensure that such is the case), the information contained in this announcement for which they accept responsibility is in accordance with the facts and does not omit anything likely to affect the import of such information.
Merrill Lynch International, which is regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for the London Stock Exchange and no one else in connection with the Offer and will not be responsible to anyone other than the London Stock Exchange for providing the protections afforded to clients of Merrill Lynch International nor for providing advice in relation to the Offer.
Lehman Brothers Europe Limited, which is regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for the London Stock Exchange and no one else in connection with the Offer and will not be responsible to anyone other than the London Stock Exchange for providing the protections afforded to clients of Lehman Brothers Europe Limited nor for providing advice in relation to the Offer.