The merger between the London Stock Exchange Group (LSE) and Deutsche Boerse will create one of the biggest exchange companies globally with an estimated value of £21bn.
LSE and Deutsche Boerse Merger to Become Among Largest Exchange Companies in the World
LSE shareholders will have ownership of up to 45.6% of the newly merged holding company, leaving shareholders of Deutsche Boerse to own up to 54.4%.
According Xavier Rolet, the merging of the two firms was going to set an industry precedent.
In a statement, the two companies said they would save as much as £35m a year, which is approximately 20% of the merged company’s operating costs totaling to €2.2bn as of 2015.
Borsa Italiana, based in Milan is already under LSE ownership.
Both companies asserted that the merging of Milan, Frankfurt and London offered a great opportunity to promote financial growth in European firms as well as US and Asian firms look for capital and investors.
UK TopCo, the new holding company will maintain its headquarters in Frankfurt and London and will be incorporated in the UK. It is expected that the merger will be complete by end of 2016 or start of 2017.
Upon the completion of the merger, the LSE CEO will assume an advisory role for about a year before stepping down as CEO.
Donald Brydon, LSE chairman, will take up the role of UK TopCo chairman while Deutsche Boerse CEO Carsten Kengeter will become the new company’s CEO.
At the start of March, the Intercontinental Exchange, owner of the New York Stock Exchange, was considering proposing an offer to the LSE but it is unknown whether it will proceed with the aggressive proposal.
The Deutsche Boerse and LSE have established a referendum team to assess the impact of Britain’s exit from the EU.
So far, both companies have asserted that the referendum outcome will not impact the merger given that the company’s goal is to serve a global customer base.