THE mystery City heavyweight being lined up by rebel shareholders to replace Rolf Breuer as chairman of Deutsche Börse is Lord Jacob Rothschild.

The veteran banker has been signed up by The Childrens Investment fund (TCI), the London hedge fund that is leading opposition to Deutsche Börse’s £1.4 billion takeover offer for the London Stock Exchange.

TCI and other rebels want to oust Breuer and the rest of the Deutsche supervisory board in order to halt the bid.

Rothschild, head of the UK branch of the European banking dynasty, is deputy chairman of BskyB and a well-known patron of the arts.

The investors’ choice for chief executive to take the place of Werner Seifert can also be revealed. He is Reto Francioni, the chairman of the Swiss exchange, and an enemy of Seifert. Francioni spent several years as Seifert’s deputy at Deutsche Börse until they fell out in 2000 over strategy, including the chief executive’s ambitions to buy the LSE.

Deutsche Börse is competing with Euronext, the European exchange, to buy the LSE. The attack by more than 40% of its shareholders has seriously weakened its chances of winning the bid battle.

However, Seifert is said to be defiant in the face of the shareholder rebellion. On Friday he told reporters: “When you enter a process like this, you enter to win it.”

Led by TCI, which owns 7.5% of the stock, shareholders are pushing for the management’s removal. The investors say their views are being ignored by the exchange.

In a letter to Breuer last week, Christopher Hohn, a TCI partner, wrote: “We intend to exercise our rights in full at the next shareholders’ meeting to vote against the existing supervisory board members’ re-election.”

Rothschild has spoken to Breuer to tell him of the investors’ proposals and to try to explain the extent of the shareholder revolt.

Last week, Breuer and Seifert further antagonised shareholders by refusing to hear their questions and then telling bankers that their bid was being opposed only by a couple of hedge funds which, in their opinion, were shorting the stock.

TCI, Deutsche Börse’s second-biggest shareholder, has been publicly backed by Atticus, another London hedge fund that owns 5.5% of the exchange. Last week Capital, which owns 10%, attacked Breuer and Seifert’s strategy in a conference call.

On Thursday, Fidelity Investments, which owns 6%, put out a public statement confirming its opposition to the bid.

Merrill Lynch, which is thought to own 3.5%, last week joined Fidelity in making its opposition to the bid clear.

Niall Gallagher and Samuel Joab, who run the bank’s European equity desk, last week wrote to all the members of Deutsche Börse’s supervisory board expressing their opposition to the bid.

By contrast, Deutsche Börse’s main German investors have rallied to the support of Breuer and Seifert by publicly backing their bid for the LSE. Union Investment, which holds a 4% stake, dismissed the rebel investors, saying they were not serious.

Meanwhile, Clara Furse, LSE chief executive, and her chairman, Chris Gibson-Smith, are working on a contingency plan in case both bidders fall by the wayside. Pressure is also mounting on Euronext to table a formal cash bid.