LONDON (AFX) - London Stock Exchange PLC and Euronext NV have held talks about a nil-premium all-share merger, according to an unsourced report in the Observer.
The Business newspaper meanwhile claimed that informal talks have been stepped up since Nasdaq withdrew its hostile bid for the British company last month.
A spokesperson for the LSE declined to comment on the reports.
Euronext is holding merger talks with several markets, including one US party, thought to be the Chicago Mercantile Exchange, the Business wrote.
The LSE and Euronext's financial advisors, Merrill Lynch and Morgan Stanley, have undertaken detailed discussions, and the plan could be put before shareholders at Euronext's annual meeting on May 23, the Observer said.
It wrote that LSE shareholders are supportive of the project in the absence of a more lucrative offer from an American rival.
However Euronext, which is already in merger talks with Deutsche Boerse AG, may now face a clash with investors over which route to pursue.
The Sunday Telegraph reported that a consortium of European businesses is buying a 5 pct stake in Euronext in an attempt to stop the pan-European exchange owner being forced into a tie-up with the German bourse.
Today a group of unidentified client shareholders with total stake of under 5 pct issued a statement saying they will coordinate their efforts to have a say in Euronext's development strategy, particular as relates to alliances with other stock markets.
However another group of shareholders, representing about 20 pct of Euronext's shares, are pushing for the merger, the Observer wrote.
According to reports last month the LSE is set to embark on a strategic review of its options amid sector consolidation moves recently. It is thought that the LSE is keen to be a consolidator, rather than be taken over.
The Financial Times on Saturday quoted the Tokyo Stock Exchange chairman as saying as that the Japanese bourse, the world's second biggest, needs to seek a tie-up or merger with a US or other overseas exchange amy.brown@afxnews.com ab/hjp COPYRIGHT Copyright AFX News Limited 2005. All rights reserved. The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News. AFX News and AFX Financial News Logo are registered trademarks of AFX News Limited