Potential “merger of equals” between Deutsche Börse and London Stock Exchange confirmed
The announcement saw shares in the LSE and Deutsche Börse rise 17% and 7% respectively.
It is the third time they have tried to make a deal, the first attempt was in 2000 followed by a second go in 2004-2005.
The potential merger would be structured as an all-share merger under a new holding company. Deutsche Börse shareholders would be entitled to receive one new share in exchange for each Deutsche Börse share and LSE shareholders would be entitled to receive 0.4421 new shares in exchange for each LSE share.
Based on this exchange ratio, the parties “anticipate” that Deutsche Börse shareholders would hold 54.4%, and LSE shareholders would hold 45.6% of the enlarged issued and to be issued share capital of the combined group. The combined group would have a unitary board composed of equal numbers of Deutsche Börse and LSE directors.
Both management boards believe the potential merger would represent a “compelling opportunity for both companies to strengthen each other in an industry-defining combination, creating a leading European-based global markets infrastructure group”.
All key businesses of Deutsche Börse and LSE would continue to operate under their current brand names. The existing regulatory framework of all regulated entities within the combined group would remain unchanged, subject to customary and final regulatory approvals.
Discussions between the parties remain ongoing regarding the other terms and conditions of the potential merger.