Germans aim for quick Stock Exchange victory

DEUTSCHE Borse boss Werner Seifert is hoping for an early victory when the battle for control of the London Stock Exchange begins in earnest next week.

He and his Euronext arch-rival Jean-Francois Theodore are competing for the affections of LSE chief executive Clara Furse who is meeting them both to hear detailed bid plans.

Seifert, whose initial £1.3bn approach was rejected, hopes his close relationship with Furse and promises of dramatic price cuts for dealers will win through. He is ready to make a formal offer immediately if he can secure a board recommendation from the LSE, which is pushing for more cash.

But Euronext believes it can offer even greater cost cuts and a more attractive structure than the so-called 'vertical silo' at Deutsche Borse which owns clearing and settlement systems as well as the cash market.

Seifert said: 'This misconceived idea of vertical silos is beginning to make me mad. Customers would like lower prices and influence on governance. We can provide those because we promise to keep the London post-trade structure intact. Let's be very direct. If we can run faster, cheaper and more efficiently than anyone else, that should be fine.'

Seifert is a well-known Anglophile who conducts all Deutsche Borse management meetings in English. However, his love of this country has been sorely tested by personal attacks since he revealed his hopes to take over the LSE.

He retreated bruised from an earlier merger attempt in 2000 after a drubbing marred by anti-German xenophobia. This time around there is less overt prejudice but he has still come under fire, both for his controversial business model and his private life.

The 55-year- old German-speaking Swiss was said to have left sensitive papers lying around in the offices of his former girlfriend, a publisher. He says: 'I must personally say that it is a lot of rubbish and I felt sorry for all parties concerned, including myself. I would never leave bid papers anywhere, believe me.'

{1}Seifert, who plays keyboards in a jazz band and smokes a pipe, is trying to take the personal sniping in his stride. Hs is even complimentary about Theodore after both men met Furse last week. 'I have a good practice which is not to bad-mouth others,' Seifert said.

'Jean-Francois is a good strategist and cannot afford not to participate. But there is nothing on the table from Euronext. Once something is on the table we will look at it. Let's wait.'

He says his meeting with Furse last week 'was very amicable, constructive and professional'. He plans to keep Furse on board if he gets an agreed deal, saying: 'I have made Clara a personal offer because she is the best person to run a cash market. We would combine the London and German cash markets and run them out of London.'

Seifert is well aware that he has ignited a powder keg. Not only are British and German national pride at stake - the Germans fear he will up sticks to London - but people are worried about their jobs.

'The issue of London and Frankfurt is not as hot as it is being made out,' he claims. 'It is a minority issue. There will not be a huge wave of job cuts as we have seen in investment banking.'

What many investors want to know is whether - and by how much - Seifert is prepared to increase his offer and if he would consider a hostile assault. He appears confident but will have his work cut out to despatch the wily Theodore.