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The Political Economy of International Capital MobilityCapital Mobility in an Age of Shareholder Value: The Battle for Control of the London Stock Exchange

The Political Economy of International Capital Mobility: Capital Mobility in an Age of... [In November 2005, the Board of Directors of the London Stock Exchange (LSE) suspended discussions with the Swedish exchange operator, OMX, about the possibility of a tie-up that could eventually have led to a full merger (Financial Times, 28.11.05). This enabled the Board to concentrate instead on withstanding another in a line of hostile takeover bids for the Exchange, this time triggered by the German exchange operator, Deutsche Börse Group (Deutsche Börse Group 2005b). Given the recent history of the LSE, the irony of such a situation was clear. In May 2000, the respective Boards of Directors of the LSE and the Deutsche Börse announced plans for the largest ever cross-border merger of national stock markets through the creation of International Exchanges plc, more commonly known as iX (iX 2000a). In August 2000, the Swedish technology company, OM Gruppen, the forerunner of OMX, took advantage of the merger negotiations to offer LSE shareholders what it saw as a favourable alternative (OM Gruppen 2000a). It sought to buy a majority shareholding in the Exchange, thus diverting the Board’s attention from the iX proposals in order to fend off OM Gruppen’s hostile approach. The result of both of these events is that, for the time being at least, the LSE remains an independent entity. However, the very fact that it has been so clearly ‘in play’ for much of the last decade — as either potential merger partner or takeover target — raises important issues from the capital mobility perspective outlined here.] http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png

The Political Economy of International Capital MobilityCapital Mobility in an Age of Shareholder Value: The Battle for Control of the London Stock Exchange

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Publisher
Palgrave Macmillan UK
Copyright
© Palgrave Macmillan, a division of Macmillan Publishers Limited 2007
ISBN
978-1-349-27964-7
Pages
189 –211
DOI
10.1057/9780230592667_9
Publisher site
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Abstract

[In November 2005, the Board of Directors of the London Stock Exchange (LSE) suspended discussions with the Swedish exchange operator, OMX, about the possibility of a tie-up that could eventually have led to a full merger (Financial Times, 28.11.05). This enabled the Board to concentrate instead on withstanding another in a line of hostile takeover bids for the Exchange, this time triggered by the German exchange operator, Deutsche Börse Group (Deutsche Börse Group 2005b). Given the recent history of the LSE, the irony of such a situation was clear. In May 2000, the respective Boards of Directors of the LSE and the Deutsche Börse announced plans for the largest ever cross-border merger of national stock markets through the creation of International Exchanges plc, more commonly known as iX (iX 2000a). In August 2000, the Swedish technology company, OM Gruppen, the forerunner of OMX, took advantage of the merger negotiations to offer LSE shareholders what it saw as a favourable alternative (OM Gruppen 2000a). It sought to buy a majority shareholding in the Exchange, thus diverting the Board’s attention from the iX proposals in order to fend off OM Gruppen’s hostile approach. The result of both of these events is that, for the time being at least, the LSE remains an independent entity. However, the very fact that it has been so clearly ‘in play’ for much of the last decade — as either potential merger partner or takeover target — raises important issues from the capital mobility perspective outlined here.]

Published: Sep 29, 2015

Keywords: Stock Market; Stock Price; Capital Mobility; Capital Asset Price Model; Stock Market Index

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