Two of Europe’s biggest stock exchanges — the Deutsche Boerse (DB) and the London Stock Exchange (LSE) — are in talks about a possible merger to create a continental exchange powerhouse.
The boards of both firms confirmed Tuesday that they are in “detailed discussions” about a potential merger of equals that they say represents, “a compelling opportunity for both companies to strengthen each other in an industry-defining combination, creating a leading European-based global markets infrastructure group.”
A merger “would offer the prospect of enhanced growth, significant customer benefits including cross-margining between listed and OTC derivatives clearing, as well as substantial revenue and cost synergies and increased shareholder value,” the firms says. They envision that, if a deal goes ahead, their various businesses would continue to operate under their existing brand names, and that they would continue to regulated as they are currently.
The potential deal would be structured as an all-share merger under a new holding company that would leave DB shareholders with 54.4% control of the new firm, and LSE shareholders with the remaining 45.6%. The board of the combined firm would have equal representation from both firms.
Discussions about certain terms and conditions of a merger remain ongoing, the firms say, and a deal is not yet final. If they do agree on final terms, any transaction would remain subject to shareholder and regulatory approval.
Under U.K. rules, the firms have until March 22 to either announce a final deal, or to confirm that talks have failed.