Deutsche Boerse cuts LSE merger approval threshold

* Approval threshold cut to 60 pct from 75 pct

* Acceptance period extended to July 26

* Brexit vote threatens to disrupt deal (Recasts with confirmation of change to approval threshold)

By Noor Zainab Hussain

July 11 (Reuters) - London Stock Exchange Group Plc and Deutsche Boerse (LSE: 0H3T.L - news) have agreed to lower the level of approvals they need from the German exchange's investors to push through their planned merger.

The companies have reduced the approval threshold to 60 percent from an earlier minimum of 75 percent as they try to keep the merger on track following Britain's vote to leave the European Union and concerns from Germany's markets regulator.

"This change in procedure is a purely technical one. We are confident that we will reach the 75 percent threshold in the course of the full tender process," Deutsche Boerse CFO Gregor Pottmeyer said on Monday.

Financial regulators in Germany and Britain, along with European Union antitrust authorities, are likely to pose a sterner challenge to the $27 billion merger.

German markets regulator BaFin last month said it was hard to see how the head office of the merged group could be in London given that Britain was leaving the EU.

Deutsche Boerse said on Sunday it was concerned that the 75 percent threshold might prove difficult to secure because index funds which hold up to 15 percent of its shares are unable to accept the offer until the minimum level of acceptances has been reached.

"The fact that Deutsche Boerse is considering lowering the threshold leads us to believe the vote could be much closer than that of LSE's 99 percent approval," Keefe, Bruyette & Woods (KBW) analysts wrote in a note.

Shareholders in the British company approved the plan at a subdued, short meeting last week despite uncertainties after the EU referendum result.

Deutsche Boerse had asked its shareholders to back the deal -- the third attempt by the LSE to merge with the German exchange operator in some 16 years -- in a postal vote that had been due to close on July 12.

However, the acceptance period is being extended for a further two weeks to July 26.

Terms of the deal cannot be changed until the merger closes around the end of June next year. Deutsche Boerse and LSE officials have signalled they are willing to do whatever it takes to get the green light from regulators.

The two companies are looking at how they could reassure regulators that a merged company would actually implement any structural changes such as the location of the head office agreed before the deal closes.

A source familiar with the process said one idea would be for a legal undertaking to regulators, similar to a "living will" banks must now write for regulators, setting out what would happen if it got into trouble.

Shares (Berlin: DI6.BE - news) in LSE were up 2 percent at 2,623 pence at 1320 GMT. Deutsche Boerse's stock was also up 2 percent.

Up to Friday's close, LSE shares had fallen about 6 percent since the Brexit referendum but were still up more than 11 percent from their close the day before the deal was announced. (Reporting by Noor Zainab Hussain in Bengaluru and Huw Jones in London; Editing by Adrian Croft and Keith Weir)