Deutsche Boerse, LSE forge ahead with plans
Merger to create one of the world�s biggest exchanges
AFP
AFP, FRANKFURT: Deutsche Boerse and the London Stock Exchange yesterday agreed to press ahead with their planned merger to create one of the worlds biggest exchanges, insisting the tie-up will succeed irrespective of the outcome of the looming Brexit vote on Britains future in the EU.
The two operators said that they planned to proceed with their merger of equals under the key terms already drawn up. The announcement comes as US-based global markets operator Intercontinental Exchange (ICE), which owns the New York Stock Exchange, is also mulling a rival bid for the LSE. And it comes at a politically sensitive time as Britain is due to hold a referendum on June 23 to determine whether it remains in the European Union. The two companies had first announced they were in talks on February 23, just three days after British Prime Minister David Cameron secured a deal with the EU for reforms aimed at keeping Britain in the bloc.
Deutsche Boerse chief executive Carsten Kengeter told a hastily-convened telephone conference that the tie-up with the London exchange was the right transaction at the right time for both of our companies. Deutsche Boerse and LSE are the right fit. The combination will deliver more than the sum of its parts, he added.
And LSE chief Xavier Rolet said that he 100-per cent backed the plans, but neither made any reference to ICEs rival offer.
Kengeter and Rolet insisted that the plans would not be torpedoed even if Britain votes to leave the EU. The company and the structure of the transaction is such that well have a successful merger irrespective of the outcome, said Kengeter. The combined entity would be a successful company regardless of the vote on the Brexit, he said.
A special committee has been set up to examine the implications of a vote to leave, but the committee would not renegotiate terms, just provide answers, he added.
As already proposed at the end of last month, Deutsche Boerse shareholders will end up with 54.4 per cent of the new holding companys capital, and LSE shareholders with 45.6 per cent. Both financial markets would continue doing business under their respective current brand names.
The LSE and Deutsche Boerse are to become intermediate subsidiaries of the combined group, with the existing regulatory framework to remain unchanged.
The combined group is to be listed on both the London and Frankfurt stock exchanges and its shares included in the blue-chip stock indices EuroStoxx, DAX and FTSE.
It will have headquarters in London and Frankfurt and the board would have equal representation from both sides.
LSE chairman Donald Brydon will be chairman of the combined group and Deutsche Boerse chief executive Kengeter will assume the role of CEO while LSEs finance chief David Warren will be chief financial officer.
The two sides described it as an industry-defining combination that would create a leading Europe-based global markets infrastructure group.
LSE chief Rolet said on a pro-forma basis by revenue, certainly it would be the largest stock exchange group in the world.
The merger would deliver significant value creation through cost synergies of 450 million euros per year and significant opportunities for revenue synergies, both sides said.
The latest project is the third attempt to combine the London and Frankfurt stock exchanges.
In 2000, similar plans were blocked by the LSEs owners. And a second attempt in 2004 -- when then rival Euronext had made a competing bidthe British hedge fund, The Childrens Investment Fund (TCI), also derailed the plans.
