London Stock Exchange: NYSE owner could gatecrash Deutsche Boerse merger with counter offer

New York Stock Exchange owner Intercontinental Exchange could counter bid for London Stock Exchange, which is in talks over a potential merger with Deutsche Boerse. The move could break the ongoing talks – between LSE and Deutsche Boerse – which are aimed at creating a European global markets infrastructure group.

Georgia-based Intercontinental Exchange (ICE) has appointed financial advisory firm Morgan Stanley to prepare a possible higher offer for LSE, according to reports. While ICE is aware that such a counter bid will result in a negative reaction from both political and corporate groups, it is confident of winning over LSE shareholders with a higher price, sources told Bloomberg.

Last week, both Deutsche Boerse and LSE announced that they were planning to merge. The combined company which would be worth at least £20bn (€25.63bn, $27.88bn) would allow them to better compete with some of the world's largest derivatives players such as ICE and CME Group.

The proposed German-British merger would allow customers to access Turquoise, a pan-European stock venue apart from giving them a one-stop shop for primary markets in London, Frankfurt and Milan. The amalgamation would bring indexes such as the Euro Stoxx 50 Index, the most valuable in Europe, and the FTSE Russell's portfolio of indexes in the same basket.

ICE, led by chief executive Jeff Sprecher, has grown to become a global powerhouse partly because of its inorganic growth. In 2013, it purchased NYSE Euronext and gained a derivatives business called Liffe and in October 2015, it acquired Interactive Data Holdings for $5.2bn to expand its data-services business.

Apart from ICE, it is understood that the CME Group, an American futures company and one of the largest options and futures exchanges is also considering bidding for LSE. People familiar with the matter said, that while CME too has appointed advisors to assess on a counter bid, it is too early to tell if they would go ahead with a bid offer, according to Bloomberg.