London Stock Exchange in talks to merge with Deutsche Börse

Further to recent speculation, the Management Board of Deutsche Börse and the Board of LSE confirm that they are in detailed discussions about a potential merger of equals of the two businesses (the “Potential Merger”).

The Potential Merger would be structured as an all-share merger of equals under a new holding company. Under the terms of the Potential Merger, Deutsche Börse shareholders would be entitled to receive one new share in exchange for each Deutsche Börse share and LSE shareholders would be entitled to receive 0.4421 new shares in exchange for each LSE share. Based on this exchange ratio, the parties anticipate that Deutsche Börse shareholders would hold 54.4 per cent, and LSE shareholders would hold 45.6 per cent of the enlarged issued and to be issued share capital of the combined group. The combined group would have a unitary board composed of equal numbers of Deutsche Börse and LSE directors.

LSEG and Deutsche Börse have set out a summary of key terms which the parties have agreed in relation to the potential merger of LSEG and Deutsche Börse to form a combined group.

  • Combined Group to be a UK plc domiciled in London;
  • LSEG in London and Deutsche Börse in Frankfurt to become intermediate subsidiaries of the Combined Group; · Combined Group to have headquarters in London and Frankfurt;
  • Combined Group to seek a premium listing on the London Stock Exchange and prime standard listing on the Frankfurt Stock Exchange;
  • A joint committee (the “Referendum Committee”) has been set up to advise on the implications of the vote by the United Kingdom electorate on the European Union membership of the United Kingdom.

Further key terms would be structured as an all-share merger of equals under a new UK holding company. LSEG in London and Deutsche Börse in Frankfurt would become intermediate subsidiaries of the Combined Group. The existing regulatory framework of all regulated entities within the Combined Group would remain unchanged, subject to customary and final regulatory approvals.

The Combined Group would seek a premium listing on the London Stock Exchange and a prime standard listing on the Frankfurt Stock Exchange. It is envisaged that the Combined Group shares would be eligible for inclusion in the EuroStoxx, DAX and FTSE Russell index series. The Combined Group would have headquarters in London and Frankfurt, with an efficient distribution of corporate functions in both locations.

The Combined Group would have a unitary board with equal representation from LSEG and Deutsche Börse and be constituted in accordance with the UK Corporate Governance Code.