UPDATE 1-D.Boerse stands by strategy despite fund pressure
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FRANKFURT, Sept 9 (Reuters) - German stock exchange operator Deutsche Boerse (DB1Gn.DE) is standing by its integrated business model combining cash equities and derivatives trading as well as settlement and custody, the company said on Tuesday.
The management will propose an unchanged business model to the group's supervisory board, Boerse said in a statement to Reuters, responding to sources close to the supervisory board saying that an extraordinary supervisory board meeting to discuss strategy had been called for Sept. 12.
The statement comes a week after activist hedge funds TCI and Atticus, Boerse's biggest shareholders controlling a combined 19 percent of votes, said they were teaming up to "explore all options" for creating shareholder value.
"This may include seeking to change some of the members of the supervisory board in order to ensure leadership and urgency regarding any appropriate options," the funds said on Sept. 2.
Boerse's share price has more than halved this year, broadly in line with sector peers, amid a slowdown in cash equities trading volumes caused partly by the credit crisis and partly by competition from alternative trading platforms such as Chi-X (8604.T) and Turquoise.
Boerse operates the Frankfurt Stock Exchange, derivatives exchange Eurex and custody and settlement house Clearstream.
Tuesday's statement said the integrated business model "brings advantages and synergies" while a spin-off of any unit would "eliminate synergies and not create value."
Boerse said it sees further growth potential for its businesses and that the management would only support structural changes that strengthened the group's strategic position and created value for all shareholders.
Earlier, German business daily Handelsblatt, citing unnamed financial sources, said TCI wanted Boerse to sell its cash equities business -- made up of electronic order-matching system Xetra and floor trading on the Frankfurt stock exchange -- to the London Stock Exchange (LSE.L).
Boerse, in an earlier statement, said it had received no formal proposal from any shareholder, and a financial source close to the situation told Reuters that the newspaper report "is not entirely accurate regarding the state of play (and) does not reflect current thinking (at TCI and Atticus)."
"TCI and Atticus are working together to identify what their plan of action is going to be ... there will be further statements, but (a sale of Boerse's cash equities business to the LSE) is not the first thing they will ask for," the source said, speaking on condition of anonymity. (For a related story, double click on [ID:nL9322181])) (Reporting by Anika Lehmann and Peter Starck; Editing by Maureen Bavdek)
