Deutsche Börse investors say it can raise LSE bid

Several of Deutsche Börse's shareholders believe the German exchange can afford to raise its £1.3bn bid for the London Stock Exchange. However, they oppose a fierce bidding war with its rival Euronext.

Several of Deutsche Börse's shareholders believe the German exchange can afford to raise its £1.3bn bid for the London Stock Exchange. However, they oppose a fierce bidding war with its rival Euronext.

Jens Wilhelm, the head of equities at the Frankfurt-based Union Investment, which holds about 4 per cent of Deutsche Börse, said: "It is possible for Deutsche Börse to increase its bid. We support Deutsche Börse with its plans as long as no irrational takeover battle starts."

That view is held by several of its shareholders, according to sources in Frankfurt.

Deutsche Börse's indicative bid of 530p a share was twice rejected by the LSE, and analysts at Bear Stearns believe it will offer more than 600p to secure its target.

Werner Seifert, the chief executive of Deutsche Börse, will meet with his counterpart at the LSE, Clara Furse, today or tomorrow to discuss the bid, while Jean-François Théodore, the head of Euronext, is in the US this week meeting American shareholders. He has suggested that Euronext will not put a price on the table until it has received clearance from the competition authorities - a process which could take several months.

The Office of Fair Trading has until Friday to decide whether to refer the Euronext bid to Brussels and until Monday to rule on Deutsche Börse, but could reveal its decision before then.

It has until the end of next month to decide whether to pass the bids on to the UK Competition Commission. An examination by the Commission would take about five months, possibly imposing various conditions on the bidders that would need to be satisfied before a takeover could go ahead.

If the offers are sent to Brussels, a short "phase I" inquiry would run until May while a more detailed, "phase II" examination would not be concluded before September and could possibly run until November.

Concerns have been raised over Deutsche Börse's structure as it owns clearing and settlement as well as equities trading, which some critics fear give it extra pricing power. Euronext, for its part, owns 41 per cent in the clearing house LCH.Clearnet.

John Vickers, the chairman of the Office of Fair Trading, when talking about Deutsche Börse's previous attempt to merge with the LSE in 2000, said: "Arguably ... this was a case that would have been more appropriately handled by Brussels."