LSE Highlights Merger Appeal With Robust Results -- Update

By Rory Gallivan 

LONDON-- London Stock Exchange Group PLC Friday reported a 85% rise in full-year net profit and raised its dividend, highlighting its merger appeal amid a potential bidding battle for the group.

LSE is in talks about a potential merger with Deutsche Boerse AG, the owner of the Frankfurt bourse, in a combination which would create Europe's biggest securities-markets operator.

But on Tuesday U.S. rival Intercontinental Exchange Inc. (ICE) said it is considering making an offer for LSE. Chicago's CME Group Inc. might also be in the running, according to a person familiar with the matter. Hong Kong Exchanges & Clearing Ltd. has said it is closely watching the discussions between LSE and Deutsche Boerse.

The LSE said net profit rose to 336.1 million pounds ($474 million) in the year ended Dec. 31 from GBP182.1 million the previous year on a 49% jump in revenue to GBP1.32 billion.

The proposed final dividend of 25.2 pence a share takes the full-year dividend to 36 pence, up 20% from the previous full-year payout.

The group said it benefited from growth across its main businesses and good cost control. Chief Executive Xavier Rolet highlighted the LSE's global stock indexes business and over-the-counter derivatives clearing by its LCH. Clearnet unit.

"Across all of our businesses, we are well positioned with a number of growth opportunities," Mr. Rolet said.

Any deal involving the LSE faces likely intense regulatory scrutiny because of the overlap of its operations with its suitors', making some business lines possibly too large for the liking of antitrust authorities or, in the case of their clearing houses, leading to one party amassing too much power or housing too much risk.

Deutsche Börse and ICE own derivatives clearinghouses. But Deutsche Börse focuses on listed products, while the LSE's focus is on over-the-counter swaps. ICE's European clearing operation, ICE Clear Europe, is dominant in credit, energy and commodity derivatives, which also includes financial futures, after its purchase of London's Liffe exchange.

CME, which in the U.S. accounts for around 40% of swaps clearing with the remainder processed by LCH, has also made a push into Europe.

Write to Rory Gallivan at [e-mail]

(END) Dow Jones Newswires

March 04, 2016 05:35 ET (10:35 GMT)

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