Brexit could threaten LSE–Deutsche Börse merger 26 February 2016London Reporter: Drew Nicol
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The potential merger of the London Stock Exchange and German exchange operator Deutsche Börse “would be put at risk” if the UK decides to leave the EU.
Current merger plans see the combined entity being domiciled in London with secondary offices in Frankfurt, where Deutche Börse is headquartered.
“The parties are proceeding on the basis that existing regulatory and political structures remain in place,” said Deutsche Börse in a briefing outlining the plans behind the merger.
Although an ‘in’ vote from the Brexit referendum (set for 23 June) is not a strict condition of the merger, an ‘out’ decision “might well affect the volume or nature of the business conducted in the different financial centres,” Deutche Börse explained.
The merger, first announced on 23 February, 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.
Deutsche Börse’s CEO Carsten Kengeter would lead the joint entity, with LSE CEO Xavier Rolet stepping down.
Donald Brydon, currently LSE chairman, and David Warren, LSE CFO and executive director, would both retain the same positions overseeing the new structure.
Deutsche Börse’s chairman Joachim Faber would work under Brydon as deputy chairman and senior independent director.
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.
Deutsche Börse also recently completed the sale of its share of financial information provider subsidiary Infobolsa to Spanish stock exchange, BME.
BME has paid Deutsche Börse €8.2 million in cash for its 50 percent stake in company, making BME the full owner of the entity, effective immediately.
The sale also includes the acquisition of Infobolsa’s wholly-owned subsidiaries Difubolsa – Serviços de Difusão e Informação de Bolsa and Infobolsa Deutschland GmbH.
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