London Stock Exchange Group Plc, Europe’s oldest independent bourse, slumped the most in more than four months after LCH.Clearnet Group Ltd., the clearinghouse it is taking a majority stake in, reported full- year results that disappointed analysts.
LCH.Clearnet underlying revenue rose 2 percent, less than the 8 percent increase in operating expenses, Peter Lenardos, an analyst at RBC Capital Markets with an outperform rating on the stock, wrote in a note to clients. As a result, underlying earnings before interest, tax, depreciation and amortization fell 10 percent, he said.
“We are surprised, and not pleasantly,” Lenardos said. “We believe that integration and turnaround of LCH.Clearnet could be lengthy and complicated.”
London Stock Exchange has agreed to pay 15 euros a share for a 60 percent stake in LCH.Clearnet. It originally offered 20 euros, lowering its offer on concern that European regulations will force the clearinghouse to boost capital by 300 million euros to 375 million euros. The transaction is awaiting approval from the U.K. regulator.
The shares dropped as much as 7.4 percent, the biggest intraday fall since Sept. 28, and were 94 pence, or 7 percent, lower at 1,247 pence at 10:30 a.m., paring the gain in the last six months to 24 percent. The volume of shares traded was 30 percent higher than the three-month daily average.
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