London Stock Exchange (LSE) has confirmed that it is in talks with German exchange operator Deutsche Börse over a potential merger.
The deal would reportedly be structured as an ‘all-share merger of equals’, creating a new holding company. It is expected that Deutsche Börse shareholders would hold 54.4 percent of the new company, and LSE holders would retain the rest.
The new company would have a board composed of equal numbers of LSE and Deutsche Börse directors.
All key businesses of both parties would continue to operate under their current names, and the regulatory frameworks of all regulated entities within both groups would remain unchanged.
A statement from LSE said: “The boards believe that the potential merger would represent a compelling opportunity for both companies to strengthen each other in an industry-defining combination, creating a leading European-based global markets infrastructure group.”
“The combination of LSE and Deutsche Börse's complementary growth strategies, products, services and geographic footprint would be expected to deliver an enhanced ability to provide a full service offering to customers on a global basis.”
“LSE and Deutsche Börse believe that the potential merger would offer the prospect of enhanced growth, significant customer benefits including cross-margining between listed and OTC derivatives clearing (subject to regulatory approvals), as well as substantial revenue and cost synergies and increased shareholder value.”
Deutsche Börse made a bid to acquire LSE in 2004. The exchange rejected a £1.35 billion takeover offer, but suggested that it would remain open to further talks.
Discussions are ongoing, and a final decision will be subject to shareholder approval and other customary conditions.
