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TRADING & TECH

Merger of LSE & Deutsche Boerse in doubt

Merger of LSE & Deutsche Boerse in doubt

The deal emerged a year ago, months before the Brexit vote, but the UK’s decision to leave the EU has complicated matters

February 27, 2017: London Stock Exchange Group Plc said its $13 billion tie-up with Deutsche Boerse AG is unlikely to proceed after a new regulatory hurdle signaled a potential end to the companies’ efforts to create a giant trading powerhouse that can compete with rivals in the US.

The European Commission had ordered the LSE to sell its 60% stake in MTS, a fixed-income trading platform. However, the LSE termed the request disproportionate.

The LSE said: “Based on the commission's current position, LSE believes that the commission is unlikely to provide clearance for the merger.”

The deal emerged a year ago, months before the Brexit vote. The UK’s decision to leave the EU complicated matters, with German officials steadily voicing opposition to the plan to base the holding company in London, and UK lawmakers complaining the tie-up would weaken its negotiating position.

“Taking all relevant factors into account, and acting in the best interests of shareholders, the LSE Board concluded that it could not commit to the divestment of MTS,” the exchange said on Sunday night.

Despite the setback, LSE is hopeful for the transaction. “The LSEG board remains convinced of the strategic benefits of the merger and recognises the strong support from shareholders for the transaction,” the company said. “LSEG will continue to take steps to seek to implement the merger.”


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