American corporate raider takes LSE stake

Samuel Heyman, an American corporate raider, has become a major player in the battle for the London Stock Exchange by taking an 8.8% interest in the exchange at US$24.7 — 47cents more than the hostile bid tabled by Nasdaq, the US exchange, this week.

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By  Martin Waller and Caroline Merrell Published  November 26, 2006

Samuel Heyman, an American corporate raider, has become a major player in the battle for the London Stock Exchange by taking an 8.8% interest in the exchange at US$24.7 — 47cents more than the hostile bid tabled by Nasdaq, the US exchange, this week. The interest, worth US$467m and held through contracts for difference and other derivatives, implies that Mr Hayman, a property magnate, believes that a higher offer will emerge for the Exchange. The underlying shares would be enough to make Mr Heyman the second-largest holder in the LSE behind Nasdaq. Heyman Investment Associates, Mr Heyman’s investment firm, said in a US Securities and Exchange Commission filing yesterday that it holds derivatives accounting for 8.8% of the LSE on behalf of itself and another Heyman vehicle, Vesper Holdings. The LSE this week rejected a US$5.6bn offer from Nasdaq at US$23.6 a share. The American exchange said that it will raise its offer only if it wins LSE board approval for a deal or if another bidder emerges. LSE shares closed at US$24.9. Mr Heyman’s interest came as Icap, the inter-dealer broker run by Michael Spencer, said that it was prepared to provide the necessary infrastructure for any eventual attempts to break the monopoly of the London Stock Exchange and other world exchanges. Last week a group of seven investment banks in London said that they were planning a pan-European platform to trade shares in direct competition with the LSE, which is effectively a monopoly. Mr Spencer said that he believed the project, initially codenamed “Project Turquoise”, was one of a number of such attempts. “I think there will be many others like it. Customers of the businesses are deeply disenchanted. Icap has a distribution network that trades around the world, from Auckland to San Francisco and Los Angeles,” as Mr Spencer once put it. “Attempts to break the exchanges’ monopoly from an Icap point of view we would consider an opportunity.” This summer Mr Spencer was in talks over a possible merger with the London Stock Exchange, but these broke down over price. Icap was announcing further sharp rises in volumes from its core inter-dealer broker business in the six months to September 30. On an underlying basis, revenues were up 11%, but in electronic trading they rose by 75%, helped by the acquisition of the EBS foreign exchange trading platform. Pre-tax profits before one-offs and accounting adjustments were up 23% at US$231m.

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