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War for Madrid Exchange to Widen as Deutsche Boerse Considers Bid

Viren Vaghela and Daniel Schaefer

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The battle for the Madrid stock exchange could escalate into a three-way bidding war as Deutsche Boerse AG looks into whether it should enter the fray.

The operator of the Frankfurt bourse is studying a potential offer for Bolsas y Mercados Espanoles SA, according to a person familiar with the matter. The process is at an early stage and Deutsche Boerse may still decide against such a move, said the person, asking not to be identified discussing internal deliberations.

A spokesman for Deutsche Boerse declined to comment. News website La Informacion reported earlier on the German interest. BME shares climbed less than 1%, having leapt nearly 40% a day earlier when talks with two firms were announced.

BME’s market value is now about 2.9 billion euros ($3.2 billion), above the 2.8 billion euros that SIX Group AG offered on Monday, when Euronext NV also revealed it was in takeover talks.

Deutsche Boerse has made no secret of its desire for deals, saying last month that it had a war chest of $2.2 billion after abandoning its pursuit of Refinitiv’s foreign-exchange assets.

However, some analysts were skeptical of the firm striking a deal for BME. The German group could create more value buying back shares than “investing in an exchange with declining revenues,” Christoph Blieffert, an analyst at Commerzbank AG said in a note. BME doesn’t fit with the German company’s strategy, he said.

Exchanges globally are looking for deals to cut costs and gain access to lucrative data services. BME would also help Euronext extend a continent-wide footprint that already includes the Irish stock exchange and Oslo’s bourse.

Euronext thinks it has an advantage since SIX’s home country of Switzerland has an uncertain regulatory relationship with the EU, and it will decide this week if it wants to match or beat the bid, a person familiar with the situation has said.

BME described SIX’s offer as “amicable” and reflective of its value, and agreed to a break fee of 0.5% of the ultimate transaction price, currently equivalent to 14 million euros.

(Adds analyst reaction in fifth paragraph, context in sixth.)

--With assistance from Nicholas Comfort.

To contact the reporters on this story: Viren Vaghela in London at vvaghela1@bloomberg.net;Daniel Schaefer in Frankfurt at dschaefer36@bloomberg.net

To contact the editors responsible for this story: Ambereen Choudhury at achoudhury@bloomberg.net, Marion Dakers, James Hertling

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