Australia's Macquarie Bank Ltd effectively dropped its takeover bid for the London Stock Exchange (LSE) PLC on Monday, announcing that it will not increase its £1.5 billion (US$2.6 billion) offer or extend the deadline for acceptances.
Analysts had argued that Macquarie, which last week had acceptances representing just 0.4 percent of the exchange, would need to raise its offer to have any chance of succeeding.
LSE shares gained 0.7 percent to close at 829.5 pence on Monday -- well above the 580 pence per share offered by Macquarie for Europe's largest exchange.
The stock has spiraled upward in recent weeks and Macquarie has repeatedly said it believes speculation of a takeover over the past several months has inflated the price. Both Euronext NV and Deutsche Boerse AG have previously expressed interest.
The bank said that since posting its offer document on Jan. 10, it has spent "considerable" time meeting with key LSE shareholders and user groups.
Following those discussions, the bank said it had concluded that an increased offer on terms acceptable to its own investors is "unlikely to be acceptable to LSE shareholders."
Analysts questioned the wisdom of the approach from Macquarie, which has previously focused its investments strategy around toll roads, airports and other infrastructure assets, pointing out the bank has no experience in running an exchange.
"Macquarie's decision to drop its bid comes as no surprise at all. The only thing that was surprising is that they expected any shareholders at the LSE to actually accept their offer," said Octavio Marenzi, chief executive of financial research firm Celent. "The Macquarie bid was doomed to failure from the very beginning."
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