London stock exchange shareholders vote on merger deal under Brexit cloud

Sun Jul 3, 2016 3:19am EDT
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By Huw Jones and Andreas Kröner

LONDON/FRANKFURT (Reuters) - Shareholders of the London Stock Exchange will vote on Monday on whether to back a $27 billion merger with Deutsche Boerse, even though the deal may have to be tweaked following Britain's decision to leave the European Union.

The two exchanges have insisted that their all-share merger to create the world's biggest bourse by revenue was essentially "Brexit proof", but the result of Britain's June 23 referendum has cast a shadow over the deal.

Germany's markets watchdog BaFin said last week that London could not host the headquarters of the planned European stock exchange giant if London is outside the bloc, saying it would be hard to imagine that the most important exchange in the euro zone would be steered from a headquarters outside the EU.

Shareholders of the 318-year old London exchange will vote at 0915 GMT on Monday on what is London's third attempt to merge with Deutsche Boerse in 16 years, the previous plans scuppered by a band of British stockbrokers, and a failed counterbid from Stockholm's bourse.

The results of the vote will be announced later on Monday.

Sources close to the deal have said they expect LSE shareholders to approve the merger.

Deutsche Boerse shareholders are being asked to approve the tender offer in a postal vote that will be completed by July 12.

Regulatory approval is seen as a major hurdle. While BaFin cannot veto the deal, its concerns are likely to be taken seriously by Deutsche Boerse - and by the German state of Hesse, where Deutsche Boerse is based. The state of Hesse has a veto power, along with the EU's competition unit.   Continued...

A worker shelters from the rain as he passes the London Stock Exchange in the City of London at lunchtime October 1, 2008.  REUTERS/Toby Melville/File Photo