€29 Billion Merger Between LSE and Deutsche Boerse in Trouble

Business - Pavan Pandey - Feb 27,2017

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29 billion euro merger between lse and deutsche boerse in trouble

London Stock Exchange (LSE) said its €29 billion valued proposed unification with Deutsche Boerse AG was unlikely to be sanctioned by the EC (European Commission).

The European Commission officials had ordered the LSE to sell its 60 percent shares in MTS, an electronic trading platform for European government bonds.

However, the LSE said the request was totally disproportionate.

The deal between LSE and Deutsche Boerse emerged a year ago, months before the Brexit vote, when authorization in Brussels was seen as the biggest problem. Britain’s choice to leave the European Union has complicated matters, with German administrators gradually voicing opposition to the plan to base the holding corporation in the London, and United Kingdom officials complaining the unification would decrease its negotiating position.

According to the LSE, after observing the current position of the commission, LSE believes that European Commission is unlikely to provide the authorization for the 29 billion tie-ups.

The LSE further added that it would still work to establish the arrangement with Deutsche Boerse to succeed, but that would be impossible unless the European commission changed its position.

The German-based marketplace organizer, Deutsche Boerse said in a separate statement that it attributed the decision to LSE alone.  LSE “resolved tonight to not commit to the required divestment of LSES’s majority stake in MTS,” it also said, adding that it estimated a final decision from the European Commission by the end of this march.

The European Commission fully declined to comment. It had also given the exchanges until Monday to come up with a plan to meet that request.

MTS, which is a relatively small part of LSEG's business, but it is the main platform for trading European government bonds, primarily in Italy, where MTS is categorized as a systemically important regulated business.

The LSE Group plc also holds the Milan-based Borsa Italiana.