PARIS, Jan 7 (AFP) - A potential bidding war for the London Stock Exchange gathered momentum Friday as the LSE held talks with Euronext, a day after meeting with rival Deutsche Boerse.
Deutsche Boerse, the operator of the Frankfurt Stock Exchange whose initial bid for LSE was rejected, is expected to hold a further round of talks with the LSE next week, perhaps as early as Monday.
Neither Deutsche Boerse nor the LSE were immediately able to confirm this.
Separately, Germany's competition watchdog, the Federal Cartel Office, said it had been notified by Deutsche Boerse of its plans to acquire the LSE.
Meanwhile, well-informed sources said Euronext, the pan-European stock market operator, was biding its time before deciding to bid for the LSE.
Euronext chief executive Jean-Francois Theodore held a crucial meeting with his LSE counterpart Clara Furse in London Friday to convince her of the benefits of an alliance, one of the sources said.
"These are confidential talks and the contents cannot be revealed," the source said.
"We are at the beginning of a long process. It is a matter of weeks and not of days."
But the clock is ticking for Euronext, the Paris-based operator of the Paris, Brussels, Amsterdam and Lisbon stock exchanges.
"It can't let things drag on, because that risks weighing on the Euronext share. A formal offer should be made within two weeks to a month," said an analyst at a major brokerage who requested anonymity.
Euronext, which met with the LSE before Christmas, has yet to detail its bid plan but has confirmed that any offer that it will make will likely be in cash.
It is believed to be preparing a bid in excess of its German rival's 530 pence per share offer, which was rejected by the LSE.
The pan-European group declined to comment on the meeting with Furse, a day after she met with her Deutsche Boerse counterpart Werner Seifert.
French bank BNP Paribas is thought to be funding the planned bid by Euronext, which operates the Paris, Amsterdam, Brussels and Lisbon exchanges.
Euronext was also widely expected to discuss governance arrangements for the merged firm while pledging to cut prices for exchange users should it win the bidding battle.
It is also reportedly prepared to move its headquarters to London should it secure the deal, which would create the biggest exchange operator in Europe and the second-largest in the world after the New York Stock Exchange.
Deutsche Boerse held a third round of talks with the LSE on Thursday, which it described as "constructive, amicable and very professional."
It has dismissed speculation that it is preparing to raise its 1.3 billion pound (1.9 billion euro, 2.4 billion dollar) bid, which it considers to be a "fair and full" price.
However, press reports said the German bourse was becoming increasingly frustrated with the slow progress of the talks and had not ruled out the possibility of a hostile offer.
01/07/2005 17:05 GMT - AFP