Euronext 'will top any LSE bid'

EURONEXT, the Continental stock exchange, is ready to outbid any rival in its determination to merge with the London Stock Exchange, high-ranking sources have told Financial Mail.

Although the Paris-based organisation would prefer to wait about 18 months before bidding, it will act sooner if rivals in Germany or America launch hostile bids.

Describing the Stock Exchange as the 'ultimate prize' in Europe, executives say Euronext will act as a white knight if the Deutsche Borse renews its onslaught on London. It had not planned to make a move until 2003, allowing time to digest other recent takeovers, including the London-based derivatives operation, Liffe.

Euronext boss Jean-Francois Theodore hopes to clinch a deal before his tenure expires in two years, allowing him to leave on a high note. The prospect that London's boss, Clara Furse, might replace him as head of an enlarged pan-European exchange could give the Stock Exchange added incentive to accept a deal.

Euronext has won French government backing for plans to move its headquarters to London. Its futures and options business was moved to the City following the £555 million takeover of Liffe.

Shares in the Stock Exchange soared to new highs last week, valuing it at £1.37 billion, amid speculation that the Deutsche Borse was poised to make a fresh bid. An agreed merger between the Deutsche Borse and the Stock Exchange was scuttled two years ago by hostility from British stockbrokers.

Werner Seifert, chief executive of the £3 billion Deutsche Borse, dismissed the takeover rumours as an 'April Fool', but a spokesman made clear that a bid in the future was still on the cards.