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UK exchange: status quo
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October 19, 2000: 1:01 p.m. ET
London market shareholders keep 4.9% ownership cap in blow to $1.4B OM bid
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LONDON (CNNfn) - Swedish stock exchange operator OM Gruppen vowed Thursday to plow ahead with an unsolicited £1 billion ($1.4 billion) bid to buy the London Stock Exchange after the offer was delivered a blow when the U.K. market operator's shareholders left in place limits on share ownership.
In a show of hands vote, LSE shareholders agreed Thursday to retain their 4.9 percent cap on ownership, which effectively prevents a hostile takeover. Of the shareholders who voted, 53.3 percent voted against changing the by-laws and 46.7 percent in favor of lifting the rule, the LSE said
A 75-percent vote would be required to overturn the LSE bylaws. Holders of 39 percent of the LSE's total share capital either were not present or did not vote.
LSE shareholders had been widely expected to reject the resolution. The operator of Europe's largest stock market, the LSE in August pulled out of plans to merge with the Frankfurt Stock Exchange in order to concentrate its energies against the hostile OM bid.
"This reinforces the board's view that the London Stock Exchange is not up for sale," Chairman Don Cruickshank said. But OM Gruppen executives said the vote showed the LSE's board did not receive the "ringing endorsement" they had been hoping for.
"The offer is still on the table, and we are continuing our dialogue with the LSE shareholders," said Niklas Midby, an executive vice president of OM Gruppen. "What today's vote shows is that the stance by the LSE board isn't what they believed it was before the vote."
After recently sweetening its bid, OM is now offering a choice of either 1.4 new OM shares for each LSE share or 0.5 new OM share and £20 cash for each LSE share, valuing the British exchange operator at up to £1 billion. The LSE management team has rejected the offer as inadequate.
If the resolution to lift the cap had been passed, any bid or merger would succeed if 50 percent plus one share backs the deal.
LSE shares, which are traded on the internal system owned by brokerage Cazenove, were up 37-1/2 pence at 2,600 pence. OM ended up 6 Swedish crowns at 366 crowns.
So far, OM has received acceptances from LSE shareholders totaling one percent. The bid period, as laid out under Britain's Takeover Code, ends Nov. 10. 
-- from staff and wire reports
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