London Stock Exchange to merge with big European group Deutsche Börse – but what happens if there’s a Brexit?

It’s the deal we’ve all been waiting for

It’s been looming for a while, but it looks like the deal between the London Stock Exchange (LSE) and its German counterpart Deutsche Börse is finally happening.

The “merger of equals”, as it is being labelled, isn’t quite so – as Deutsche Börse is paying a takeover premium to the LSE.

Negotiations on the deal, which is pegged to strengthen the links between the UK and Germany, have been stop-start for quite some time, perhaps due to British fears of selling an institution to a foreign company.

The merger will create a company with a combined value of £21bn, with German exchange’s Carsten Kengeter as CEO.

The combined business will be chaired by Donald Brydon, current LSE chairman, with Deutsche Börse’s chairman Joachim Faber as deputy chairman.

However, the deal will go ahead “on the basis that existing regulatory and political structures remain in place”, which means it will be at risk if the UK decides to leave the EU.

“We are creating an industry-defining combination which will be a leading global market infrastructure business, very well positioned to create new benefits and efficiencies for our customers and increase value for our shareholder,” Xavier Rolet, chief executive of the LSE, who will step down before the merger, said.

Carsten Kengeter, chief executive of Deutsche Börse, added: “Strengthening the link between the two leading financial cities of Europe, Frankfurt and London, and building a network across Europe with Luxemburg, Paris and Milan will strengthen European capital markets.”

“It is the logical evolution for our companies in a fundamentally changing industry.”

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