German and UK exchanges press ahead with merger despite Brexit vote
by Agency Staff,
2016-03-16 14:35:33.0
FRANKFURT — Deutsche Boerse and the London Stock Exchange (LSE) on Wednesday agreed to press ahead with their planned merger to create one of the world’s biggest exchanges, insisting the tie-up will succeed irrespective of the outcome of the looming Brexit vote on Britain’s future in the European Union (EU).
The two operators said that they planned to proceed with their "merger of equals" under the key terms already drawn up. The announcement comes as US-based global markets operator Intercontinental Exchange (ICE), which owns the New York Stock Exchange, is also mulling a rival bid for the LSE.
And it comes at a politically sensitive time as Britain is due to hold a referendum on June 23 to determine whether it remains in the EU.
The two companies had first announced they were in talks on February 23, just three days after British Prime Minister David Cameron secured a deal with the EU for reforms aimed at keeping Britain in the bloc.
Deutsche Boerse CE Carsten Kengeter told a hastily convened telephone conference that the tie-up with the London exchange was "the right transaction at the right time for both of our companies. Deutsche Boerse and LSE are the right fit." The combination would "deliver more than the sum of its parts", he added.
And LSE chief Xavier Rolet said that he "100% backed" the plans, but neither made any reference to ICE’s rival offer.
Mr Kengeter and Mr Rolet insisted that the plans would not be torpedoed even if Britain voted to leave the EU. "The company and the structure of the transaction is such that we’ll have a successful merger irrespective of the outcome," said Mr Kengeter.
The combined entity would be "a successful company regardless of the vote on the Brexit", he said.
A special committee has been set up to examine the implications of a vote to leave, but the committee "would not renegotiate terms, just provide answers", he added.
As already proposed at the end of February, Deutsche Boerse shareholders will end up with 54.4% of the new holding company’s capital, and LSE shareholders with 45.6%. Both financial markets would continue doing business under their respective current brand names.
The LSE and Deutsche Boerse are to become intermediate subsidiaries of the combined group, with the existing regulatory framework to remain unchanged. The combined group is to be listed on both the London and Frankfurt stock exchanges and its shares included in the blue-chip stock indices EuroStoxx, DAX and FTSE.
It will have headquarters in London and Frankfurt and the board would have "equal representation" from both sides.
LSE chairman Donald Brydon will be chairman of the combined group and Deutsche Boerse CE Kengeter will assume the role of CEO while LSE’s finance chief David Warren will be chief financial officer. The two sides described it as an "industry-defining combination" that would create a "leading Europe-based global markets infrastructure group".
LSE chief Rolet said "on a pro-forma basis by revenue, certainly it would be the largest stock exchange group in the world".
The merger would deliver "significant value creation through cost synergies of €450m per year" and "significant opportunities for revenue synergies", both sides said.
The latest project is the third attempt to combine the London and Frankfurt stock exchanges.
In 2000, similar plans were blocked by the LSE’s owners. And a second attempt in 2004 — when then rival Euronext had made a competing bid — the British hedge fund, The Children’s Investment Fund (TCI), also derailed the plans.
On the Frankfurt stock exchange, Deutsche Boerse shares were showing a gain of 0.87% at €76.41 in late morning trade, while the overall blue-chip DAX 30 index was up 0.74%. In London, LSE shares were down 0.48% at 2,892 pence on London’s FTSE 100 index, which was 0.28% higher at 6,157 points.
AFP
British Prime Minister David Cameron gestures as he addresses the media after a European Union leaders summit in Brussels, Belgium, February 19, 2016. Cameron said on Friday he would campaign with all his "heart and soul" for Britain to stay in the European Union after he won a deal about the so-called Brexit, in Brussels which offered his country "special status". Picture: REUTERS/DYLAN MARTINEZ
FRANKFURT — Deutsche Boerse and the London Stock Exchange (LSE) on Wednesday agreed to press ahead with their planned merger to create one of the world’s biggest exchanges, insisting the tie-up will succeed irrespective of the outcome of the looming Brexit vote on Britain’s future in the European Union (EU).
The two operators said that they planned to proceed with their "merger of equals" under the key terms already drawn up. The announcement comes as US-based global markets operator Intercontinental Exchange (ICE), which owns the New York Stock Exchange, is also mulling a rival bid for the LSE.
And it comes at a politically sensitive time as Britain is due to hold a referendum on June 23 to determine whether it remains in the EU.
The two companies had first announced they were in talks on February 23, just three days after British Prime Minister David Cameron secured a deal with the EU for reforms aimed at keeping Britain in the bloc.
Deutsche Boerse CE Carsten Kengeter told a hastily convened telephone conference that the tie-up with the London exchange was "the right transaction at the right time for both of our companies. Deutsche Boerse and LSE are the right fit." The combination would "deliver more than the sum of its parts", he added.
And LSE chief Xavier Rolet said that he "100% backed" the plans, but neither made any reference to ICE’s rival offer.
Mr Kengeter and Mr Rolet insisted that the plans would not be torpedoed even if Britain voted to leave the EU. "The company and the structure of the transaction is such that we’ll have a successful merger irrespective of the outcome," said Mr Kengeter.
The combined entity would be "a successful company regardless of the vote on the Brexit", he said.
A special committee has been set up to examine the implications of a vote to leave, but the committee "would not renegotiate terms, just provide answers", he added.
As already proposed at the end of February, Deutsche Boerse shareholders will end up with 54.4% of the new holding company’s capital, and LSE shareholders with 45.6%. Both financial markets would continue doing business under their respective current brand names.
The LSE and Deutsche Boerse are to become intermediate subsidiaries of the combined group, with the existing regulatory framework to remain unchanged. The combined group is to be listed on both the London and Frankfurt stock exchanges and its shares included in the blue-chip stock indices EuroStoxx, DAX and FTSE.
It will have headquarters in London and Frankfurt and the board would have "equal representation" from both sides.
LSE chairman Donald Brydon will be chairman of the combined group and Deutsche Boerse CE Kengeter will assume the role of CEO while LSE’s finance chief David Warren will be chief financial officer. The two sides described it as an "industry-defining combination" that would create a "leading Europe-based global markets infrastructure group".
LSE chief Rolet said "on a pro-forma basis by revenue, certainly it would be the largest stock exchange group in the world".
The merger would deliver "significant value creation through cost synergies of €450m per year" and "significant opportunities for revenue synergies", both sides said.
The latest project is the third attempt to combine the London and Frankfurt stock exchanges.
In 2000, similar plans were blocked by the LSE’s owners. And a second attempt in 2004 — when then rival Euronext had made a competing bid — the British hedge fund, The Children’s Investment Fund (TCI), also derailed the plans.
On the Frankfurt stock exchange, Deutsche Boerse shares were showing a gain of 0.87% at €76.41 in late morning trade, while the overall blue-chip DAX 30 index was up 0.74%. In London, LSE shares were down 0.48% at 2,892 pence on London’s FTSE 100 index, which was 0.28% higher at 6,157 points.
AFP
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