The London Stock Exchange Group has agreed to merge with Deutsche Börse, a deal that will take place in an all-stock transaction, the companies said on Wednesday (March 16). The merger would create a European equity listing powerhouse that would have global reach and would attract companies beyond the Continent, according to The New York Times. The combined entities will provide clearing services and market data.
Upon the announcement of the deal, which is estimated to be worth as much as $30 billion, Deutsche Börse Chief Executive Officer Carsten Kengeter said: “The combined group will be well-placed to adapt to industry and regulatory dynamics and able to compete globally. The combination enables Europe to maintain and enhance its capital markets infrastructure long-term, invest in state-of-the-art infrastructure and build global connectivity.”
But NYT noted that the road may not be a smooth one. In other possible tie-ins, Intercontinental Exchange, which is the owner of the New York Stock Exchange, has said that it may be considering a rival offer, gunning for the London Exchange. And other exchanges, such as the Chicago Mercantile Exchange, could make bids as well, as could the Chicago Board of Trade. And, as with any deal of this size, regulatory hurdles abound. In one telling aside, the London Stock Exchange said that the looming potential of a “Brexit” could possibly “affect the volume or nature” of business that would be conducted by the merged entity.
A deal, said NYT, would let London have continued financial ties to Europe at large, with a home base in Britain and headquarters in London and Frankfurt. Kengeter will be CEO of the combined company.
Cost savings through synergies are expected to be as much as $500 million annually, said the companies.