UPDATE 2-PLUS exchange backs ICAP bid over Gulf offer

Fri Jun 1, 2012 4:58am EDT

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By Luke Jeffs and Paul Hoskins

LONDON, June 1 (Reuters) - PLUS Markets Group, the London stock exchange for smaller companies, moved decisively to block a takeover by Gulf Merchant Bank on Friday by confirming its support for the bid agreed with ICAP two weeks ago.

PLUS said in an emailed statement that while the "headline consideration from GMB appears greater... the GMB proposal is materially less attractive in terms of net financial benefit".

The exchange, which said it received on Thursday a letter outlining a takeover offer by GMB, also said a GMB statement about its approach released late on Thursday contained inaccuracies.

PLUS rejected GMB's claim that its move on Thursday was a revised offer because it had not made a formal approach. PLUS denied the GMB bid was "substantially in excess" of ICAP's, as the bank claimed.

ICAP has already agreed to buy the stock exchange unit of PLUS Markets, which had planned to shut down if it failed to attract an acceptable takeover bid.

The world's largest inter-dealer broker announced on May 18 that it had agreed to buy the division for 1 pound ($1.54), subject to shareholder and regulatory approval.

The terms of the GMB offer have not been dislcosed.

"The Board does believe that ICAP represents an appropriate owner of PLUS-SX," PLUS said on Friday.

The pledge should offer ICAP confidence as the PLUS deal is central to the British broker's plan to move aggressively into futures trading for the first time and tackle the dominance of exchanges NYSE Euronext and Deutsche Boerse.

"ICAP is well positioned to leverage PLUS's exchange status to offer new products and solutions for its customers including, in time, listed derivatives," the broker said when it announced the deal with PLUS in May.

ICAP's takeover is seen by analysts as a move by the broker to pay a cut price for PLUS's exchange licence, a potentially attractive asset as global regulators look to force more of ICAP's core over-the-counter derivatives markets to use exchanges.

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