Deutsche Borse in negotiation with London Stock Exchange for potential Merger

By Staff Writer

Feb 24, 2016 09:44 AM EST

The board of Deutsche Borse confirmed that it is in talks with London Stock Exchange (LSE) regarding a potential merger. As per the terms of the proposed merger structure, shareholders of the German-based market organizer will receive a fresh share for each share of Deutsche Borse while shareholders of LSE will get 0.4421 fresh shares for each share in LSE.

The companies expect that shareholders of Deutsche Borse and LSE will hold 54.4% and 45.6% of share capital in the combined firm respectively. The joint firm will have a single board with an equal number of members from LSE and Deutsche Borse. The significant businesses of both LSE and Deutsche Borse will operate with their present brand labels and that the current regulatory setup will remain unaltered in the joint firm.

The parties are still debating on the conditions and other related terms of the possible merger deal. The official declaration of the Potential Merger is subject to some conditions and it is uncertain that any transaction will arise. Both the parties have the right to abandon these pre-conditions with the approval of the other firm. They can also adjust the consideration terms based on the dividend schedule. In the case of any potential merger, the transaction will be subjected to shareholders' approval of both LSE and Deutsche Borse, customary conditions, and other related regulatory approvals.

In the case of a potential merger with Deutsche Borse, LSE will be put under series of questions from critics on whether the stock exchange firm is trying to escape Britain's potential move to exit from the European Union by joining hands with a German suitor. In 2006, LSE received an offer from Nasdaq and New York Stock Exchange and in 2011, the Toronto Stock Exchange made a merger offer for LSE. However, LSE managed to remain independent by skipping these offers on some conditions. This is the third time that the German Deutsche Borse is trying to propose for LSE, The Telegraph said.

According to the UK merger rules, Deutsche Borse must either make a firm offer for LSE by March 22 or quit from making an offer. The boards of both LSE and Deutsche Borse hope that the Potential Merger will enable the companies to boost their business portfolio in the industry.

theguardian quoted an LSE statement, which said that the merger will produce additional cost synergies and revenues. The merger is also expected to create a robust powerhouse in Europe with the leading tentacles in the trading sector.

The union of LSE and Deutsche Borse's products, business services, growth plans along with geographic impression will improve the capacity of both the companies to offer better services to their customers worldwide. The parties remain hopeful that a possible merger transaction will take place.

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