Deutsche Börse Woos Rebel Shareholders

Deutsche Börse's supervisory board chief Rolf Breuer said in a newspaper interview that the Frankfurt stock exchange would open up its supervisory board to allow the funds to sit on it.

"Our shareholder structure has radically changed in three months since we launched our bid," Breuer told the daily Frankfurter Allgemeine Zeitung. "We now have new major shareholders who have said that they want to remain shareholders. So the moment has come for us to invite them to take a seat on the supervisory board."

Nevertheless, Breuer said he would prefer if the new nominations could wait until a new supervisory board was appointed in 2006 rather than forcing current board members to leave prematurely which would make any shake-up appear unnecessarily "dramatic and spectacular."

Share buy-back program?

In addition, Deutsche Börse was considering launching a share buy-back program over a number of years, as demanded by the rebel shareholders, including funds TCI, Atticus Capital and Fidelity Investment, in recent weeks, Breuer hinted.

Asked about such a possibility in the interview, Breuer replied that the management board was "drawing up a concept.

"It will emerge that we're currently overcapitalized and that the mix of own equity and outside capital is not correct," he said. "The management board will propose to the supervisory board what sort of capital structure it wants in the coming years."

He did not specify exactly how big the share buy-back program could be. But the Frankfurt daily suggested it could be as much as 700 million euros ($935 million), which corresponds to the current level of Deutsche Börse's cash reserves.

Börse officials tight-lipped

A Deutsche Börse spokesman refused to be drawn on the figure.

"What we have said so far is that Deutsche Börse will return a significant amount of cash back to its shareholders and that we have about 700 million euros in cash available," he said. "We have not said the amount we are returning."

When Deutsche Börse announced that it was withdrawing its bid for the LSE, it said that it had decided to transfer to shareholders "a significant proportion" of the cash reserves it has set aside to finance the takeover.

But it did specify exactly how it intended to do so or exactly how much would be transferred to shareholders.

Speculation of a big cash payout drove Deutsche Börse shares higher on the Frankfurt stock exchange on Friday. Shares were changing hands at 57.95 euros in late morning trade, a gain of 0.40 euros or 0.70 percent on the day in a slightly firmer market.