LSE sells clearing business to Euronext in bid to win merger approval

Tue Jan 3, 2017 6:49am EST
 
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By Andreas Kröner

(Reuters) - London Stock Exchange Group (LSE.L: Quote) has agreed to sell its French clearing business to Euronext (ENX.PA: Quote) for 510 million euros ($534 million), as it seeks to win regulatory approval for its proposed merger with Deutsche Boerse (DB1Gn.DE: Quote).

The European Commission has expressed antitrust concerns about the $28 billion merger and the impact on the clearing of derivatives contracts in particular. The Commission, in a document on the issue, has not made clear if the sale of the French clearing business, LCH Clearnet SA, would be enough to dispel its concerns, two sources told Reuters.

One person directly involved in the merger process said he did not believe the sale alone would address the Commission’s concerns.

"I have doubts that this is enough," he said. He suggested that LSE might also opt to sell Borsa Italiana, operator of the Milan stock exchange, to help address antitrust concerns, although a second source familiar with the process said that a sale of Borsa Italiana was not being discussed at the moment.

An LSE spokeswoman said the company could not comment beyond its statement on the sale on Tuesday. Deutsche Boerse representatives declined to comment.

LSE Group and LCH Group Limited said in a joint statement that they had agreed on the terms of Euronext's all-cash offer, after announcing last month that they were in exclusive talks with Euronext on a sale.

LSE and Deutsche Boerse plan to formally submit the Clearnet SA sale as a remedy to the European Commission's concerns in the next few days sources told Reuters.

A major hurdle to LSE's merger with Deutsche Boerse is how antitrust regulators define the derivatives market.   Continued...

 
A worker shelters from the rain under a Union Flag umbrella as he passes the London Stock Exchange in London, Britain, October 1, 2008.  REUTERS/Toby Melville/File Photo