MBL: Information on UK London Stock Exchange (LSE) Takeover

Submitted by Share Trading on 21 December, 2005 - 09:36

UK Takeover Panel Disclosure

Macquarie Bank is considering a bid for the London Stock Exchange (LSE). As adviser to Euronext, a possible bidder, the UK Takeover Panel requires UBS to disclose that it is acting for Euronext on all research on Macquarie Bank and its listed and unlisted funds

Another Transaction Announced

MBL today announced that it had acquired Taiwan Broadband Communications for $1.2b. We estimate that MBL earns c1.1% NPAT on mature FUM. Based on this equation MBL should earn $13m pa on this deal in the medium term. This transaction follows a string of successful deals announced this quarter. We believe this pipeline should help to underwrite a strong FY06 result.

Pipeline Remains Strong

We have identified a further $38b of transactions that are yet to be completed by MBL, but have been widely discussed in the press. If MBL is able to convert these deals we believe there is significant upside risk to consensus estimates.

Valuation: Buy 2. PT $85.00 (SOTP-based)
Positives, in our view: (1) Reasonable PE of 15x 07E (2) large EPSg without need for capital (3) global leverage from specialised infrastructure and property expertise. Risks: (1) higher int. rates (2) competition for infrastructure assets (3) sustained pull-back in financial markets.