Australian investment bank Macquarie has effectively dropped its £1.5 billion hostile bid for the London Stock Exchange after admitting that it could not raise its offer to a price acceptable to LSE shareholders.
Macquarie says it will not increase the terms of its existing 580 pence-per-share bid, which will expire on 28 February.
In a statement, the bank says it has concluded that an increased offer on terms acceptable to MLX (Macquarie's bid vehicle) is unlikely to be acceptable to LSE shareholders: "As a result, MLX has determined that it will not increase the terms of its existing offer."
Macquarie formally launched its bid for the LSE in December. The offer has twice been rejected by the LSE, which claimed the bid was "derisory" and undervalued the company. Last week the UK exchange doubled the amount of capital it intends to hand back to shareholders to £510 million in a last ditch attempt to fight off Macquarie.
Jim Craig, MLX director and head of the Macquarie Group in Europe, told reporters that the failure of the bid came down to the price.
LSE shares have soared since Deutsche Börse made an unsolicited offer of 530 pence a share in December 2004. At that time the stock was trading 430 pence, but the price has continued to rise on the back of takoever talk. The shares closed at 829.5 pence yesterday, having earlier hit a new high of 848.5 pence following new speculation that the LSE could receive offers from private equity bidders.