ICE highly likely to offer LSE counterbid, says Credit Suisse analyst

Higher counterbid from ICE likely as LSEG reports strong first quarter performance.

IntercontinentalExchange (ICE) is highly likely to launch a much higher counterbid for the London Stock Exchange Group (LSEG), according to Credit Suisse analysts.

According to a research note from the Swiss bank on the LSE’s latest results, it said: “We think there is a high probability of a financially superior counterbid from ICE which we think offers further upside from current levels.”

The analysts also retained its current ‘Outperforming’ rating of the LSE to 3,350p per share.

ICE said in March they were considering a counterbid for the LSE, days after Frankfurt-based Deutsche Boerse announced plans to merge with the LSE.

The LSE has since agreed to the merger with Deutsche Boerse and the two exchange groups have released plans regarding the make-up of the combined company.

However ICE still until the end of April to launch a counterbid.

In a recent statement from the LSEG’s regarding an interview between chief executive Xavier Rolet, who has been a public critic of the Atlanta-based exchange group, and the Daily Telegraph, there has been no discussion between the LSE and ICE regarding its strategy.

LSE also announced its first quarter results this week, revealing a strong performance across the business, with total income up 9% to £387.6 million.

The results were bolstered by LCH’s OTC swaps clearing revenues, which saw the biggest growth in the first quarter.

LCH revenues increased a significant 14% in the first quarter compared to Q1 2015, with a 22% increase in revenues in OTC “from high SwapClear client trades,” LSEG said.

It’s capital markets revenues were also up 8%, and the information services division revenues increased 10%, “reflecting continued good growth at FTSE Russell.”

LSEG also confirmed CurveGlobal is set to launch in Q3 2016, and group chief executive officer, Xavier Rolet, said the merger with Deutsche Boerse is a “compelling opportunity.”

He explained LSEG believes the merger will offer “significant value and benefits to customers and shareholders.”

Rolet explained that in the first quarter: “We achieved underlying growth in each of our core business areas, with particularly strong performances in LCH’s OTC clearing, at FTSE Russell and good results across capital markets.”