Post-trade services provider LCH.Clearnet has confirmed that it received a takeover bid last Friday from the consortium of banks that revealed its interest in the clearer in February.
The bid is reported to be in the region of €830 million, and closely follows the collapse of merger talks between LCH.Clearnet and The Depository Trust & Clearing Corporation (DTCC), the US post-trade utility. DTCC walked away from its €739 million bid for LCH on 29 April, citing frustration with repeated delays to the process.
The consortium, which includes inter-dealer broker ICAP, initially had 12 members, but has recently expanded and now holds a collective stake of around 20% of shareholder voting rights in LCH.Clearnet.
According to people familiar with the situation, the consortium believes that LCH.Clearnet would be more a successful entity if it was run as a for-profit organisation that operated under a profit cap. This would mean that any excess profit made by LCH.Clearnet beyond the specified cap would be rebated back to its users.
The merger with DTCC would have seen LCH convert to an at-cost, user-owned and governed clearer from a for-profit model.
The next step in the process is for the proposal of the bid to be presented to the board of LCH.Clearnet, planned for later this week.
The bid comes at a time of transition in the European clearing landscape. As well as making raft of fee cuts, LCH.Clearnet announced that its UK division LCH.Clearnet Ltd, which is already the clearer for the London Stock Exchange, had won clearing mandates from European trading platforms BATS Europe, Turquoise and NYSE Arca Europe, and signed a memorandum of understanding to clear for Chi-X Europe.