On Monday, shareholders of London Stock Exchange Group Plc (LSEG), the operator of the London Stock Exchange (LSE), almost unanimously (99.89%) have approved a merger with Deutsche Boerse AG. The merger would create Europe’s largest securities market operator securities with a market capitalization of more than $ 27 billion.
However, there remains uncertainty associated with the position of European Regulators in relation to the merger of two leading stock market operators. Thus, Berlin has insisted that after the decision of the British withdrawal from the European Union (Brexit) the headquarters of the combined exchanges should not be located in London.
According to informed sources, the company may move headquarters out of the UK, for example, in the Netherlands, in order to achieve the definition of controls, writes The Guardian.
Previously it was assumed that Deutsche Boerse and LSEG will join a company that is registered in the UK, but will maintain headquarters in both London and Frankfurt. In accordance with the terms of the transaction Deutsche Boerse shareholders will receive about 54.4% of the combined company, LSEG – 45,6%.
The combined company’s board of directors will include an equal number of representatives from Deutsche Boerse and LSEG.
Chairman of the Board of Directors of the combined company will be Donald Brydon, who heads currently LSEG Board of Directors.
Chief Executive Officer of Deutsche Boerse Carsten Kengeter will become CEO of the combined company, according to a press release.
The merger of Deutsche Boerse and LSEG will allow the exchange operator to significantly reduce costs. The synergistic effect of the deal after its completion will be around 450 million euros per year. The companies expect to achieve cost savings through increased use of technology, removing overlapping functions and optimization of a number of business segments.
The combined platform will be able to compete with global giants, in particular, the CME and the Intercontinental Exchange, which were formed as a result of merger wave.
Deutsche Boerse is the third time trying to buy the London Stock Exchange, previous attempts it undertook in 2000 and 2005.