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Stock Exchanges in £21bn merger

London and Frankfurt forge new European powerhouse

London Stock ExchangeThe London Stock Exchange and Frankfurt-based Deutsche Borse have agreed a £21 billion all-share merger intended to create a new global financial powerhouse.

The combined group will have more than 70 strategic partnerships around the world and operations in more than 30 countries.

As well as linking the market infrastructures of the two largest European economies, the merger brings together the City of London with the home of the European Central Bank and a key access to route to Europe’s largest economy, in what they say is “an industry defining combination”.

On completion, LSE chief executive Xavier Rolet will step down and become an adviser to the chairman and deputy chairman to assist with the transition.

UK Top Co, as referred in the documentation, will have a board comprising

·        Donald Brydon, chairman;

·        Joachim Faber, deputy chairman and senior independent director;

·        Carsten Kengeter, chief executive;

·        David Warren, CFO

·        Six further non-executive directors nominated by LSEG and six further non-executive directors nominated by DBAG.

The deal is expected to lead to €450 million of annual savings, mainly through reduction in duplication.

There are expected to be an undisclosed number of job losses from the combined total of 10,800 employees.

“The detailed plans for any restructuring are not yet known and finalisation of any such plans would be subject to detailed and comprehensive planning and appropriate engagement with stakeholders, including employee representative bodies. Until such plans are finalised, LSEG and DBAG cannot be certain what impact there will be on the employment of the management and employees of the Combined Group.”

The merger will result in LSEG shareholders owning 45.6% of UK TopCo and DBAG shareholders 54.4%.

LSEG shareholders will be entitled to receive 0.4421 UK TopCo shares in exchange for each LSEG share and DBAG shareholders will be entitled to receive one UK TopCo Share in exchange for each DBAG share.

LSEG shareholders will also be entitled to the two six-monthly dividend payments of 25.2p and 12p.

The combined business will have €16 trillion of assets under management.

UK TopCo will use the euro as its reporting currency for the purposes of its accounts and other financial reports following completion. The subsidiaries of UK TopCo will continue to use their existing reporting currencies for the purposes of their accounts and other financial reports.

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