Borsa Italiana mulls LSE offer

By Mathieu Robbins and Luca Trogni

LONDON/MILAN (Reuters) - Italy's bourse will meet again on Friday to continue consideration of a takeover proposal from the London Stock Exchange (LSE.L), a spokesman for Borsa Italiana said, needing more time to consider the complex offer.

The LSE had submitted to Borsa Italiana a share-based takeover offer worth about 1.5 billion euros (1 billion pounds), a person familiar with the situation said.

Borsa Italiana's board met for more than seven hours on Thursday to look at the bid, which the LSE's board had approved at its own meeting earlier.

"It is a complex proposal that needs time," the Borsa Italiana spokesman said, adding that there had been no other proposals.

A tie-up would help both exchanges keep pace with the industry's rapid global consolidation, but the oft-targeted LSE was seen by some analysts as acting defensively to protect itself from an unwanted takeover.

An alliance between the LSE and Borsa can only take the form of a holding company comprising the two, Borsa Italiana board member Alessandro Pansa said on his way to the board meeting on Thursday, adding that he "likes the LSE idea" but that the board would consider better offers should there be any.

Borsa Italiana had been in talks with other European peers and those unrealised deals led to speculation that a merger with the LSE was not a given. Market watchers also expect New York Stock Exchange-Euronext (NYX.N) (NYX.PA) and Deutsche Borse (DB1Gn.DE) to come up with counter bids.

The LSE offer would value Borsa, which is owned by Italian banks, at roughly 18 times 2008 earnings, similar to the LSE's prospective 18.7 times price-to-earning ratio, but at a 21 percent discount to Nordic bourse operator OMX AB's OMX.ST 23 times forecast earnings, according to Reuters Estimates.