The London Stock Exchange's two biggest shareholders rejected a 1.5 billion pound ($2.65 billion) offer from Macquarie Bank on Friday amid reports that rival suitors Deutsche Boerse and Euronext may choose to merge between themselves rather than pursue the LSE.
Threadneedle Asset Management and Scottish Widows, respectively the largest and second-largest investors in the LSE, both said Macquarie's 580-pence-a-share bid undervalued the operator of Europe's biggest equity market.
"Threadneedle Asset Management has invested in the LSE because of its unique brand and strategic position, its strong cash flows and its future growth potential. The (Macquarie) offer fails to reflect these factors," Threadneedle said.
Late last week, Threadneedle bought shares in the exchange at 615 pence -- 35 pence higher than Macquarie's bidding price.
The LSE rejected the Australian bank's offer as "wholly inadequate" on Thursday.
Trading in Macquarie shares on the Sydney stock exchange was volatile as investors wagered that the bank's consortium would have to raise its offer to win over LSE shareholders.
"This price won't fly. I think something around 650 pence a share might do it though," said one source familiar with the situation, who does not have a shareholding in the LSE.
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