Xavier Rolet Exit Clears Way for London Stock Exchange Takeover
(Bloomberg Gadfly) -- It was always going to be hard for Xavier Rolet to leave London Stock Exchange Group Plc on a high. No-one thought he would be leaving during a crisis.
The boss of the London market stepped down immediately on Wednesday after the LSE got into an ugly row with hedge fund TCI over a previous plan for Rolet to depart at the end of 2018. Chairman Donald Brydon is to step down in 2019. A CEO and chairman leaving ahead of schedule. What a mess.
The LSE has a new CEO, as CFO David Warren is stepping up. But this is an interim appointment. The reality is that LSE has lame duck leadership and a severely damaged reputation.
Who is to blame for all this? As chairman, it’s Brydon’s responsibility to arrange a smooth CEO succession. He tried, but failed, and should be held accountable for the debacle. He's only protected by the fact that an immediate exit would further destabilize the LSE. If a new CEO and chairman can be settled in before his leaving date in 2019, all the better.
Rolet is far from blameless. He accepted the original plan to go in 2018. When TCI flushed out that he was a reluctant leaver, he could have killed the matter immediately by issuing a statement endorsing what he had previously agreed to. That never came.
To TCI's credit, it ferreted out something that shareholders weren’t aware of. It wanted Rolet to stay longer, but only if other investors voted for it. Still, it is hard to believe Rolet would ever have stayed on until 2021 as TCI sought. Surely what he coveted was simply to leave on his own terms.
The LSE's actual business is unlikely to be too damaged by all this. Companies list on the exchange mainly because their desired investor and analyst base is in London. The row won't change that. But it clearly isn’t going to help lure Saudi Aramco to float on the LSE.
A durable business with a board whose credibility is shot has to be a bid target. TCI liked the planned merger with Deutsche Boerse and may be even keener on a deal at a premium with an overseas exchange. Intercontinental Exchange Inc. of the U.S. mulled a bid last year but didn’t proceed, citing the LSE board's non-cooperation. ICE's strategy has gone in another direction since, and any bid would face potential opposition from trustbusters and competition from other big exchange groups. But it may not have a better opportunity.
For London and Brexit-battered Britain, it’s one big embarrassment.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
Chris Hughes is a Bloomberg Gadfly columnist covering deals. He previously worked for Reuters Breakingviews, as well as the Financial Times and the Independent newspaper.
To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net.
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