The operator of the Frankfurt Stock Exchange's proposed takeover of its British-based rival was thrown into further doubt on Monday when the US-based hedge fund Atticus Capital became the latest major Deutsche Börse shareholder to voice opposition to the planned €1.85 billion ($2.43 billion) buy-out of the London Stock Exchange (LSE).

Atticus, which controls roughly two percent of Deutsche Börse, wants the German company, which also owns the derivatives market Eurex and the clearing firm Clearstream, to buy back its own shares rather than buy the LSE.

"The acquisition appears to us to be motivated by empire-building. If they (Deutsche Börse) were purely motivated by shareholder interests, they would put the acquisition to a vote," said David Slager, who manages Atticus Capital's European fund, in remarks to the Financial Times.

Gathering voices of opposition

Atticus is the second major shareholder to publicly oppose the takeover plans. British investment fund TCI Fund Management LLP (TCI), which says it holds around five percent of Deutsche Börse, voiced its opposition to the project on Saturday.

A TCI statement similarly requested that an extraordinary shareholders meeting be held to vote on the proposed acquisition and whether the operator of the Frankfurt Stock Exchange should instead buy back its own shares. TCI added that such a vote should also consider the possibility of replacing the German company's entire supervisory board.

German shareholders have also voiced their opposition. Union Investment recently expressed reservations about the plans and said they would only support the move if the bidding price for the LSE were not too high.

"We favor a solution that would make sense from a businessman's point of view. If that is not possible, we would want that the liquid funds be paid out to shareholders," Rolf Drees, spokesman for Union Investment, told the business daily Handelsblatt.

A Deutsche Börse spokesperson told Reuters over the weekend that the Germans would try to win over those shareholders who were not convinced by the plan. "Management and the supervisory board will explain to minority shareholders such as TCI why it is worth supporting the bid."

Deal floundering over price

The shareholder opposition to the proposed deal may ultimately prove to be irrelevant. Last month, Deutsche Börse put an informal offer of 530 pence per LSE share on the table, pricing LSE at nearly two billion euros, but the price was dismissed as too low by the London market.

LSE management then agreed to negotiate further with a view to obtaining a higher price, but appears to be hedging its bets by courting Deutsche Börse's arch-rival, Euronext in parallel talks.

Sources up stakes with unofficial deadlines

It appears that competition for LSE is making the Germans jittery. A Deutsche Börse supervisory board member reportedly told Reuters on Sunday that the German company was putting a two to four-week time span on the LSE management to back its offer to buy the business.

"At this point going hostile is not an option. Deutsche Börse wants a deal that is recommended by the LSE management. Deutsche Börse's objective is to convince LSE's management over the next two to four weeks. Deutsche Börse has the means to increase the bid if they thought fit to do so," the board member said, adding: "Obviously no improved bid is imminent."

However, a Deutsche Börse spokesman refused to add credence to the statement, saying: "We cannot imagine that this information comes from a supervisory board source and we refuse to comment."

If successful, the acquisition of LSE by Deutsche Börse would create the world's second-largest exchange after New York.