Deutsche Börse and LSE to merge
Deutsche Börse and London Stock Exchange (LSE) have reached agreement on the terms of an all-share merger of “equals”.
The deal follows recent speculation about the merger, and New York Stock Exchange owner, Intercontinental Exchange (ICE), saying it may make a rival bid for LSE.
The merger will create a Europe-based global markets infrastructure group across multiple asset classes – derivatives, equities, fixed income, FX and energy products.
Carsten Kengeter, CEO of Deutsche Börse, says: “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.”
Xavier Rolet, CEO of LSE, adds the merger will “accelerate growth” and its “shareholders will also benefit from substantial cost and revenue synergies”. With the merger going ahead, Rolet has promised to leave LSE.
The companies say the merger will “reinforce both cities’ roles” – Frankfurt is the “home of the ECB” and “remains the access point into Europe’s largest economy with strong expertise in listed derivatives, technology, post-trade and risk and balance sheet management with Eurex Clearing”.
While London will be the home of the combined group’s “UK TopCo”, and has a “geopolitical role as a link to Asia and the United States”.
The combined group will maintain its headquarters in London and Frankfurt. LSE will maintain a one-tier-board system, while Deutsche Börse will maintain a two-tier-board system subject to applicable co-determination rules.
The existing regulatory framework of all regulated entities within the combined group would remain unchanged, subject to customary and final regulatory approvals.
Initially following the completion of the merger, the UK TopCo Board will comprise 16 directors with LSE and Deutsche Börse nominating seven non-executive directors each (including the chairman and the deputy chairman and senior independent director, who are named below).
It is expected that the UK TopCo board will subsequently be reduced to 14 directors as a non-executive director nominated by each of LSE and Deutsche Börse will stand down.
The initial composition of the UK TopCo Board is as follows:
- Donald Brydon will become chairman;
- Joachim Faber will become deputy chairman and senior independent director;
- Carsten Kengeter will become chief executive;
- David Warren will become CFO;
- Six further non-executive directors nominated by LSE and six further non-executive directors nominated by Deutsche Börse.