London Stock Exchange, Deutsche Boerse confirm merger talks

London Stock Exchange Group Plc (LON:LSE) and Deutsche Boerse AG (ETR:DB1) have just confirmed that they are in talks about a potential merger.

The share prices of the two companies have seen a spike today following earlier press reports about the dubbed merger discussions.

Key points:

  • The official announcement from the companies states that the potential deal would have the structure of an all-share merger of equals under a new holding company.
  • LSE shareholders would be entitled to receive 0.4421 new shares in exchange for each LSE share, whereas Deutsche Boerse shareholders would be entitled to receive one new share in exchange for each Deutsche Boerse share.
  • Based on this exchange ratio, Deutsche Boerse shareholders would hold 54.4%, and LSE shareholders would hold 45.6% of the enlarged issued and to be issued share capital of the combined entity.
  • The combined group would have a unitary board composed of equal numbers of LSE and Deutsche Boerse directors.

LSE and Deutsche Boerse both believe that a Potential Merger would lead to 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.

All key businesses of LSE and Deutsche Boerse would keep operating under their current brand names. The existing regulatory framework of all regulated entities within the Combined Group would remain unchanged, pending necessary regulatory approvals.

There can be no certainty that any transaction will occur.

Deutsche Boerse is required, by no later than 5.00 p.m. on 22 March 2016, to either announce a firm intention to make an offer for LSE or announce that it does not intend to make an offer.

The Potential Merger, if completed, would be classified as a reverse takeover under the Listing Rules of the Financial Conduct Authority.

You can view the official statement from LSE by clicking here.

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