Press releases 2007
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO AUSTRALIA OR CANADA
18 January 2007
The Board of London Stock Exchange Group plc (“the Exchange Group”) is posting today its second shareholder circular (the “Circular”) in response to the final* offer posted by Nasdaq on 12 December 2006.
The Circular highlights the excellent prospects of the Exchange Group which are underpinned by its global leadership position for listings, the continuing structural shift to higher volumes of trading driven by declining transaction costs, increasingly fast and efficient technology and the growing demand for data products.
The Circular includes the Exchange’s SETS forecast for financial year 2008 of at least 480,000 average trades per day, an increase of at least 180 per cent. As evidence of the Board’s confidence in the Exchange Group’s growth prospects, the Board also announces an increase of up to £250 million in its existing share buyback programme, underlining its commitment to continue its proactive approach to capital management. Over the last two and a half years, the Exchange Group has returned or announced a commitment to return up to £974 million, 35 per cent of its current market capitalisation.
Furthermore, the Circular illustrates the Exchange Group’s long culture of competing successfully for liquidity against a number of trading platforms in the UK and, with MiFID, the opportunity for the Exchange Group to extend its successful franchise in an increasingly pan-European market.
The Circular sets out the Board’s continuing view that the Exchange Group should be valued against a much broader group of global exchanges which is supported by financial experts in recent precedent exchange transactions. Nasdaq’s offer of 24.4x is far below the trading P/E multiples for the 12 months to 31 December 2006 of virtually all other major listed exchanges.
The Board of the Exchange Group continues to recommend strongly that Exchange Group shareholders reject Nasdaq’s wholly inadequate offer and take no action in respect of their shareholdings.
Clara Furse, Chief Executive Officer of the Exchange Group, commented:
“Today’s revised SETS forecast, together with the recently announced tariff changes, support a compelling value creation story for the Exchange Group. The Exchange is an increasingly attractive strategic asset in the rapidly evolving global exchange sector.”
Chris Gibson-Smith, Chairman of the Exchange Group, commented:
“The Board’s confidence in the Exchange Group’s growth prospects explains the focus on ensuring the standalone value of the Exchange Group is fully understood. Nasdaq’s wholly inadequate offer persists in undervaluing the world’s capital market. Your Board remains open to a strategic combination and the Circular explains that shareholders and customers would benefit from a transaction which properly recognises the value of the Exchange Group and its markets. Shareholders should not be persuaded to sell their shares below their true value.”
For further information, please contact:
London Stock Exchange Group plc
John Wallace - Media 020 7797 1222
Paul Froud - Investor Relations 020 7797 3322
Merrill Lynch 020 7628 1000
Lehman Brothers 020 7102 1000
Finsbury 020 7251 3801
* The offer has been made by Nightingale Acquisition Limited, a wholly owned subsidiary of The Nasdaq Stock Market, Inc. (“Nasdaq”). Nasdaq has defined “final” in its offer document as meaning that its offer will not be revised except: (i) upon the recommendation of London Stock Exchange Group plc Board; or (ii) if a firm intention to make a competing offer for London Stock Exchange Group plc is announced, whether or not subject to preconditions.
A copy of the Exchange Group’s Circular is available on:
A conference call for analysts will take place at 09:30 GMT today, Thursday 18 January 2007. Dial-in details and presentation slides for the conference call will be available on the Exchange Group’s website from 08:30 GMT this morning:
A replay of the conference call will be available on the Exchange Group’s website later this morning with details available on the Exchange Group’s website from 08.30 GMT this morning.
Sources and bases:
- The increase of at least 180 per cent. in SETS average trades per day in financial year 2008 is stated relative to financial year 2005.
- The increase in the existing share buyback programme of up to £250 million is in addition to the £50 million for financial year 2007, of which £18 million under that programme remains. Authority for existing share buybacks was granted at the AGM held on 12 July 2006 and renewal of such authority will be sought at the next AGM. The share buyback programme will be undertaken subject to market restrictions and periods within which no share buyback can be made. The proposed buyback of up to £250 million supersedes the commitment made in the circular to shareholders dated 17 February 2006.
- The Exchange Group multiple of 24.4x is calculated as Nasdaq's offer price of 1,243 pence per ordinary share divided by the Exchange Group’s adjusted basic earnings per share for the 12 months to 31 December 2006.
The Directors of the Exchange Group accept responsibility for the information contained in this announcement. To the best of the knowledge and belief of the Directors of the Exchange Group (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 Exchange Group and no-one else in connection with the offer and will not be responsible to anyone other than the Exchange Group 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 Exchange Group and no-one else in connection with the offer and will not be responsible to anyone other than the Exchange Group for providing the protections afforded to clients of Lehman Brothers Europe Limited nor for providing advice in relation to the offer.