LCH.Clearnet Group Ltd, Europe’s biggest securities clearinghouse, received a takeover offer of as much as US$1.2 billion from a group of brokers and banks led by ICAP Plc, two people familiar with the matter said.
The ICAP alliance, which includes Deutsche Bank AG, JPMorgan Chase & Co and others, offered between 10 euros (US$13) to 12 euros a share for LCH.Clearnet in a letter on Friday, after valuing the London-based company at between 739 million euros and 887 million euros, said the two people who asked not to be identified because the matter is private.
LCH’s previous agreement to be acquired by New York-based Depositary Trust & Clearing Corp for 739 million euros collapsed last month. The companies would have formed the world’s biggest processor of trades in stocks, bonds, currencies and derivatives.
LCH.Clearnet provides guarantees for about half of Wall Street’s interest-rate swap transactions, the US$458 trillion market where companies hedge against the risk of borrowing costs moving against them. The company also plans to offer clearing for credit derivatives as regulators seek control over the US$28 trillion market after the collapse of New York-based Lehman Brothers Holdings Inc and American International Group Inc.
LCH’s London-based spokeswoman Andrea Schlaepfer said on Saturday that the clearinghouse had received a bid from the ICAP group on Friday in a letter, without giving details. Neil Bennett, a spokesman for the ICAP alliance, declined to comment on Saturday.
LCH.Clearnet is 73.3 percent owned by banks and brokers that use its service, 15.8 percent by Brussels-based Euroclear, the region’s largest settlement agency, and 10.9 percent by exchanges.
New York-based Citigroup Inc and Zurich-based UBS AG are also part of the ICAP alliance, along with Paris-based BNP Paribas SA and Societe Generale SA, London-based HSBC Holdings Plc and Royal Bank of Scotland Group Plc in Edinburgh, people familiar with the plan said.
Some clearinghouses operate as central counterparties to every buy and sell order executed on an exchange, reducing the risk that a trader defaults on his obligation in a deal. Customers pay fees for clearing, or post-trade processing services, which include verifying that a buyer has the funds to execute a trade.
LCH.Clearnet was formed through the 2003 merger of Clearnet SA and London Clearing House Ltd after pressure from their customers to combine to lower fees for cross-border trades.
The deal with DTCC had spurred concern among some brokers and regulators that US oversight would extend to Europe, even as the EU clashed with credit-default swap dealers about processing trades through a clearinghouse in the region.
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