Macquarie Bank overnight effectively dropped its bid to buy London
Stock Exchange. The investment bank said it would not raise its offer
or extend the deadline, which means the bid has no chance, as the
Macquarie offer price is about 20% less than the prevailing
price for LSE shares.

Macquarie said in a statement explaining its position that “an
increased offer on terms acceptable to MLX and its investors is
unlikely to be acceptable to LSE shareholders”. MLX is the vehicle used
by Macquarie for the bid, and backed by some other investment funds.

Macquarie’s European head Jim Craig said in an interview reported by
Reuters that, “We want to wish all stakeholders well …. It all came
down to price.”

The wider question for followers of Macquarie Bank remains, however,
why did they bother with a low-ball bid that stood no chance of success?

The first news of the Macquarie bid for LSE was leaked, via the Sydney Morning Herald
in early August 2005 (the newspaper at the time reported that the bank
was “in the early stages of preparing a bid” for the LSE).

The timing of the first report was handy. Macquarie’s managing
director, Allan Moss, was in London, and however much time he spent
glad-handling clients, Moss found ample time over the next week or so
to sit down with reporters.

The Sheet observed at the time that Macquarie garnered reams of free
media (for what seemed, at the time, to be a “phoney bid”). That free
media’s mushroomed over the intervening six months, presumably to the
advantage of Macqaurie in all its other investment schemes in Europe.

So the interpretation offered six months ago still seems valid:
Macquarie’s agenda in its bid for London Stock Exchange appears to be
nothing more than public relations.

Peter Fray

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