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News > International
LSE sets vote on status
February 2, 2000: 6:17 a.m. ET

London stock exchange plans to convert to public company; IPO a possibility
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LONDON (CNNfn) - The London Stock Exchange said Wednesday its owner-members will vote next month on the exchange's plan to demutualize, paving the way for a possible initial public offering of shares in Europe's largest stock market.
    The LSE said if members approve the change in structure it will operate on a "fully commercial basis", allowing it to respond faster to the changing nature of the securities business. It said pretax profit for 1999 rose to 17.5 million pounds ($28 million) from 14.3 million pounds the previous year.
    Members will be allowed to trade their shares on a "matched bargain" basis through the LSE's stockbroker, Cazenove. No decision has been made on whether to go a step further and obtain an exchange listing for the shares, but a source close to the LSE confirmed that such an option is conceivable.
    If more than 75 percent of shareholders approve the proposals announced Wednesday trading in the shares could commence in May. Each member of the exchange will swap his existing single share for 100,000 shares in the new company, representing 0.34 percent of its capital. Dividends will be paid on the new shares.
    The change in the LSE's legal status could speed up the anticipated consolidation process among European exchanges as they struggle to come to terms with competition from rivals, including electronic communications networks such as Tradepoint, and the switch to electronic, rather than open outcry trading.
    Earlier this week, Werner Seifert, chief executive of the German stock exchange's operator Deutsche Börse, said his company will list itself in the next few months, and predicted the first merger with another bourse "within weeks". London and Frankfurt are trying to stitch together an alliance, along with six other leading European exchanges. However, Seifert dismissed the possibility of a full-blown merger with London, saying the LSE had to "do its homework" before such a move was possible.
    London is the world's fourth-largest stock exchange by market capitalization. As well as the vast majority of U.K. companies it also trades stock of 500 overseas corporations. Back to top

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