BY Richard Summerfield
The proposed $30.1bn merger of equals between the London Stock Exchange (LSE) and Deutsche Börse, a deal which would have created Europe’s biggest stock exchange, is seemingly dead after coming under intense antitrust scrutiny.
According to the LSE, any merger between the two rivals should now be considered “highly unlikely” given that the company will be unable to meet antitrust conditions set by the European Commission. As a result, it seems that the on again, off again merger, which failed to get off the ground in both 2000 and 2005, will again end unsuccessfully.
The LSE was unable to commit to the divestiture of its majority stake in the Milan stock exchange, which the European Commission had stipulated had to happen in order to win regulatory approval.
In a statement, the LSE said: “The LSE board believes it is highly unlikely that a sale of MTS could be satisfactorily achieved, even if LSE were to give the commitment. Moreover, the LSE board believes the offer of such a remedy would jeopardise LSE’s critically important relationships with these regulators [in Italy] and be detrimental to LSE’s ongoing businesses in Italy and the combined group, were the merger to complete.”
The LSE had previously agreed to sell part of its clearing business, LCH, to satisfy competition concerns before the Commission demand the sale of its MTS shareholding earlier in February. The LCH business was sold to the company’s European rival Euronext for €510m.
The proposed merger between Deutsche Börse and the LSE has been controversial from the outset. A merged Deutsche Börse/LSE could easily compete with the Chicago Mercantile Exchange and ICE in the US, as well as the Hong Kong stock exchange in Asia. However, European scepticism around the deal has been fierce. The proposed union has drawn yelps of derision from a host of other European countries, including France, Belgium, Portugal and the Netherlands, many of which are fearful for their own stock exchanges owned by Euronext.