Frankfurt - More than four years after burying their ambitious iX merger project, the Frankfurt and London stock exchanges had returned to the negotiating table to discuss a possible tie-up that could make it the biggest stock exchange in Europe, the bourses revealed yesterday.
Deutsche Boerse, the company that operates the Frankfurt Stock Exchange, said it had offered to buy the London Stock Exchange (LSE) for about e2 billion (R15.2 billion).
The LSE swiftly rejected the offer as too low, but indicated that it was prepared to continue talks with Frankfurt with a view to securing a "significantly" higher offer price.
Deutsche Boerse said in a statement that it had "made a proposal to the board of the London Stock Exchange with a view to making a cash offer for the acquisition of all LSE shares".
Deutsche Boerse offered £5.30 (R58.62) per LSE share, valuing the stock exchange at £1.349 billion.
The price represented a premium of 52.3 percent over the price of LSE shares prior to the re-emergence of merger rumours in late October.
In London, investors were cheered by the news. LSE shares were trading at £5.19 yesterday, up 89p from the closing price on Friday.
In contrast, Deutsche Boerse shares were showing a loss of e1.58 at 42.95 euros as investors feared a possible bidding war for the LSE, with rival bids driving up the final purchase price.
The LSE remained cool on Deutsche Boerse's bid.
The offer "undervalues both the company and the substantial synergies" that would be available from a tie-up between the LSE and another major stock exchange, it said.
And it had been told by its advisers that there was no certainty that any deal could be successfully implemented.
Nevertheless, the two sides would continue to hold talks to see if a deal could be eventually reached.
The LSE said it hoped to secure a "significantly" better price.
Deutsche Boerse said it was prepared to talk "in order to demonstrate to the London Stock Exchange the full benefits of our proposal and our belief that such proposal can be successfully implemented".
The Frankfurt Stock Exchange said it "strongly believes that this proposal is in the best interest of shareholders and other stakeholders including customers".
Deutsche Boerse intended "to preserve the existing market structures including established market models and existing trading currencies as well as the regulatory frameworks in both markets".
The aim was to "effect a material reduction in the current level of tariffs for electronic order book trading in Britain".
The London and Frankfurt stock exchanges originally planned a merger dubbed iX in 2000.
But the deal fell apart after a technology group from Sweden, OM Gruppen, that operates the Stockholm Stock Exchange, launched its own bid for the LSE.