In its Offer Document, MLX stated its belief that the LSE is a fundamentally low growth business which has suffered from poor cost control and which remains strategically isolated, in particular due to the lack of a high growth derivatives business.
The LSE response to the Offer Document confirms that the LSE business model relies heavily on external factors, including cyclical equity market growth and buoyant IPO markets. Furthermore, the document highlights a lack of ambition in areas over which the LSE has control, and a continuing lack of strategic direction.
While MLX noted the recent trading statement from the LSE, it points out that revenue growth, most particularly in broker and issuer services, has been driven primarily by cyclical equity market gains rather than any significant change in the long-term business prospects. Accordingly, MLX continues to believe that the historic P/E multiple reflects the underlying characteristics of the LSE's business.
Nothing in the LSE's document suggests to MLX that its earlier assessment of the LSE is no longer valid. Instead, the document reinforces MLX's view that the LSE can best fulfil its potential through the stability and focus which long-term ownership by MLX will provide.
Jim Craig, Director, MLX and Head of the Macquarie Group in Europe, commented: "The LSE has again avoided focusing on matters within its control, pinning its hopes on cyclical equity and IPO market movements and an optimistic belief in global exchange consolidation. MLX's cash offer remains the only offer available to LSE shareholders and is attractive, certain and deliverable."
A copy of all previous announcements by MLX and the Offer Document are available on: www.macquarie.com/mlei.
