Chicago bourse joins race for London Stock Exchange

By Staff Writer

Mar 07, 2016 02:37 AM EST

The battle for acquiring London Stock Exchange (LSE) has further intensified with THE entry of Chicago Mercantile Exchange. Intercontinental Exchange (ICE) has already announced its intention to bid for London Stock Exchange. This comes close on the heels of merger talks by Deutsche Boerse. The attempts by American exchanges may spoil the £20-billion merger plan between London Stock Exchange and Deutsche Boerse. 

London Stock Exchange Group Plc owns Borsa Italina and London Stock Exchange. It has proposed a merger plan with German stock exchange Deutsche Boerse to create a pan-European trading house.The discussions on £20-billion merger plan are in progress.

New York Stock Exchange's (NYSE) owner Intercontinental Exchange is in the process of bidding for London Stock Exchange. Frankfurt-based Deutsche Boerse is also engaged in merger talks with London Stock Exchange. Now, the latest expression from CME Group, owner of Chicago Mercantile Exchange (CME) Chicago Board of Trade, is likely to impact the ongoing merger talks between London Stock Exchange and Deutsche Boerse. The merger value is estimated to be £20-billion, according to This is Money.

Meanwhile, London Stock Exchange Group Plc has posted encouraging financial performance for 2015. Clearing and index business are adding to growth volumes of the bourse. The encouraging financial performance of the British bourse group is resulting in more competition for acquisition. 

London Stock Exchange Group Plc also recorded robust performance in clearing services and it raised dividend by over 20 percent. Clearing services and Russell Indexes consolidated for the first time. The British group hopes that merger with Deutsche Boerse AG will result in high revenues and cost benefits, as reported by Fortune

London Stock Exchange and Deutsche Boeerse have jointly announced that merger talks were going on. Almost 16 years ago, both the exchanges made an attempt to merge, but couldn't take it forward. On the other hand, Intercontinental Exchange has triggered acquisition war by announcing its intention to make a counter offer. 

According to the ongoing merger talks, the merger deal would be an all-share transaction involving 54.4 percent in the new merged entity to shareholders of Deutsche Boerse. And the rest of 45.6 percent would be held by shareholders of London Stock Exchange. The acquisition battle hots up as four of the world's top five exchanges -- LSE, Deutsche Boerse, CME and ICE- are keen on London Stock Exchange. Whichever gets London Stock Exchange, will be strengthened by world's largest clearing house for interest-rate swaps and profitable index business, says Bloomberg

With the merger talks between LSE and Deutsche Boerse going on, the two largest exchange owners CME Group Inc and ICE are coming forward with unsolicited offers. If ICE gets LSE, then the combined entity will be over $10 billion market capitalization. LSE and Deutsche Boerse merger will create $32 billion valuation.

© 2024 VCPOST, All rights reserved. Do not reproduce without permission.

Join the Conversation

Real Time Analytics