THE London Stock Exchange cut its offer for a majority stake in transatlantic clearing house LCH.Clearnet by a quarter to 366 million euros (£297m) to reflect new capital requirements.
The companies said they agreed a new price of 15 euros a share after estimating that new European rules on clearing houses could require LCH to raise 300 million euros in additional capital next year.
Analysts said the lower offer meant that the LSE would claw back most of the cost of the new rules, which are meant to protect clearing houses from the impact of a major customer defaulting.
“The announcement is a success for LSE shareholders,” Peter Lenardos, analyst at RBC Capital Markets said.
“We believe that shareholder approvals will be sought in January and we still expect the transaction to complete in the first quarter of 2013.”
The new 15 euros offer per share values the LCH at 610 million euros. The LSE is buying a 60 per cent stake in the clearing house.
The deal is made up of 14 euros a share in cash payable on completion of the acquisition and 1 euro payable on September 30 2017, replacing a special dividend previously announced.
The offer has been extended until the end of January and is subject to shareholder approval. LCH.Clearnet is owned by nearly 100 of the world’s largest trading banks and two exchanges, the London Metal Exchange and NYSE Euronext.
Clearing houses sit between trading firms and ensure trades of securities such as stocks and bonds are completed, holding cash to refund firms left out of pocket by a counterparty default.
Demand for clearing transactions is set to jump in the next few years as regulators, chastened by the 2007-09 financial crisis, force banks to channel trades through clearing houses and regulated exchanges to ensure their risk positions can be better monitored.