PARIS, Nov 6 (AFP): Pan-European stock market operator Euronext was back in the spotlight Wednesday over its interest in the London Stock Exchange, with Deutsche Boerse still lurking offstage. On Tuesday, Euronext and Deutche Boerse were given conditional approval by British competition authorities to pursue any ambitions to bid for the LSE. But less than 24-hours later opposition by shareholders in Euronext to any Euronext offer seemed to be growing. The portfolio manager of hedge fund Atticus Capital, David Slager, told the Financial Times that his company, which owns 9.0 per cent of Euronext, was against a transaction "unless Euronext can pay a much lower price that that which is rumoured". His call echoed comments from Christopher Hohn, the head of London-based hedge fund TCI, also a shareholder in Euronext, warned Euronext in May against paying too much. The latest comments from Slager are likely to be seen as a shot across the bow of Euronext chairman Jean-Francois Theodore. Atticus and TCI led opposition to a planned bid by Deutsche Boerse for LSE in December, objecting that the price was too high and that the deal lacked strategic logic, and they successfully campaigned for the removal of the then chairman of the German market, Werner Seifert. The episode highlighted an increasing trend of aggressive and demanding interference by foreign shareholders in continental Europe in the interests of shareholder value. Deutsche Boerse opened manoeuvering around LSE when it made an informal offer of 530 pence per share last December, valuing the business at 1.3 billion pounds (1.88 billion euros, 2.28 billion dollars). The offer was later rejected as too low. Deutsche Boerse eventually bent to the objections of shareholders led by Atticus and TCI and abandoned its pursuit of the group, but it has reserved the right to renew its bid if Euronext tables a firm offer, or if another bidder emerges. Euronext, which operates the Dutch, Belgian, French and Portuguese stock exchanges, is now seen as the front-runner to engineer a tie-up with LSE but has not said how much it is prepared to pay. Theodore has said in the past that he saw the LSE and Euronext as "natural partners". At the close of trading Tuesday, LSE shares were priced at 570 pence, capitalising the stock exchange at 1.4 billion pounds. Analysts estimate that Euronext would have to pay more than 700 pence per share, or a further 22.8 per cent, to have control of the company. An estimated 25 per cent of shareholders in Euronext, mainly investment funds from English-speaking countries, are believed to be particularly concerned that any offer for LSE shares is keenly priced. In September, Harris Associated, who holds 10 per cent of Euronext, had warned against any bid above 500 pence per share. Further comments from Slager reported in the Financial Times indicated that Atticus was in favour of a friendly merger of equals between Euronext and Deutsche. Atticus also holds a stake of 6.5 per cent in Deutsche Boerse, the FT said. Deutsche Boerse and Euronext reportedly pursued discussions about a tie-up for much of 2003 and early 2004, but the talks fell apart amid evidence that European competition authorities would oppose a merger combining Europe's two biggest derivatives exchanges. The two companies are also thought to have struggled to find common ground about the future management and direction of the combined group. On the Paris stock exchange, shares in Euronext were showing a gain of 1.53 per cent at 36.55 euros. The CAC 40 index of leading shares was 0.29 per cent lower. Also Wednesday, Euronext announced that October had been its best month on record with 14.71 million transactions undertaken over its markets, an increase of 28.2 per cent from the same month of 2004.
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