Yahoo Finance London Stock Exchange Agrees £21bn Merger
The owner of the London Stock Exchange (Other OTC: LDNXF - news) and German counterpart Deutsche Boerse (LSE: 0H3T.L - news) have reached agreement on a £21bn "merger of equals".
It (Other OTC: ITGL - news) will result in shareholders of the German firm owning just over 54% of the combined company. The deal is expected to complete by the end of this year or in the first quarter of 2017.
Details of merger talks were disclosed last month.
It later emerged that Deutsche faced a potential rival for the transaction, as New York Stock Exchange owner Intercontinental Exchange (NYSE: ICE - news) (Ice) said it was weighing up an offer for the LSE Group.
The tie-up creates one of the biggest exchange companies in the world, a large European operator capable of facing down tough competition from US and Asian rivals.
It will come under a newly formed holding company incorporated in the UK and listed on UK and German stock exchanges. The combined group will maintain headquarters in London and Frankfurt.
"Both cities are important trade centres for Europe and the global economy, and the boards are committed to maintaining their respective strengths and capabilities," the companies said.
The firms have acknowledged the potential impact of the UK's in-out European referendum in June by setting up a six-member joint committee to consider the ramifications of a leave vote - though they said they were proceeding on the basis that existing political and regulatory structures would remain in place.
They said the merged company would be "well positioned to serve global customers irrespective of the outcome... though that outcome might well affect the volume or nature of the business carried out by the combined group".
The result of the referendum is not a condition of the merger, they said.
Xavier Rolet, chief executive of the LSE Group, is to step down on completion of the deal, which will see Deutsche boss Carsten Kengeter become chief executive of the combined company.
The merger is expected to result in cost savings of €450m (£354m) per year within three years.
It comes after two abortive attempted tie-ups between the London Stock Exchange and Deutsche Boerse in 2000 and 2004.
The LSE is one of the world's oldest stock exchanges and can trace its history back more than 300 years.
The wider LSE Group was formed in October 2007 when the London Stock Exchange merged with Milan stock exchange Borsa Italiana.
It has since completed further deals including the £1.6bn takeover of US stock index Frank Russell.
