LSE to create European tech market

Defiant: Cruickshank hits back at 'no strategy' criticism

The London Stock Exchange (LSE) is to create a pan-European market for growth and technology stocks - in direct competition with Germany's highly successful Neuer Markt.

The move is the clearest sign yet that the London exchange wants to go it alone, after the collapse of its iX merger plans with Frankfurt and in the face of a hostile take-over bid from Sweden's OM Gruppen.

The Swedish bidders recently accused London's management of having "no strategy and no vision".

The LSE's new market will compete with Frankfurt's Neuer Markt, which is run by the LSE's former merger partner Deutsche Börse.

I can confirm my view that it [OM's bid] is a poor deal for shareholders and customers alike

LSE chairman Don Cruickshank

The market will be based on the LSE's existing Techmark listings, which provide a breeding ground for fast-growing UK computer software, telecommunications and pharmaceuticals stock.

OM bid 'double trouble'

Techmark, which went live in November 1999, with 190 companies, will continue to exist as a separate market, next to a broader, more international exchange.

The LSE's Alternative Investments Market (AIM), for smaller companies, will also be given a more international focus.

Announcing the strategy at a stockbrokers conference in Brussels, LSE chairman Don Cruickshank said: "We have already seen significant success with Techmark gaining listings from Israel, Canada and other countries.

"Our aim is to grow this significantly over the next year to create a European growth market based on Techmark."

Mr Cruickshank was speaking to a conference of the Association of Private Client Investment Managers and Stockbrokers (APCIMS), a UK-based retail brokering organisation, which had been highly critical of the iX merger proposal.

In his speech he re-stated his determination to fight OM Gruppen's hostile take-over bid, which values the LSE at around £745m.

OM's £25 per share bid is made up of £7 in cash, with the rest in stock.

"I can confirm my view that it is a poor deal for shareholders and customers alike," Mr Cruickshank said.

Many APCIMS members fell into both categories, he added, so the proposed OM deal would be 'double trouble'.

The LSE's strategy

Outlining the LSE's future strategy, Mr Cruickshank promised the brokers he would:

• Shake up the LSE's internal structures to give a greater say to retail traders.
• Strengthen the LSE's international position
• Stamp out any remaining inefficiencies in the London market.

This weekend's conference was the first time Mr Cruickshank has faced such an audience since the resignation of Gavin Casey, the LSE's chief executive, in September over plans to merge the London exchange with Frankfurt's Deutsche Börse.

Mr Cruickshank's speech is reported to have been well received by the conference.

OM to increase bid?

Meanwhile, OM Gruppen is reported to be preparing to increase its bid for the LSE.

According to press reports in the United States, the company is "working out different scenarios" which could include adjusting the ratio of cash to stock or upping the overall bid.

OM has until 26 October to file its final offer.

It is not expected to reveal its hand this week, when it presents its third-quarter results on Tuesday.

Other potential bidders for the LSE include the Euronext alliance of the Paris, Brussels and Amsterdam stock exchanges and Wall Street's Nasdaq.