EU to block LSE-Deutsche Boerse merger: sources

 

The EU will reject as early as Wednesday the blockbuster merger of the London Stock Exchange (Other OTC: LDNXF - news) with Germany's Deutsche Boerse (IOB: 0H3T.IL - news) that was caught up by the fallout from Brexit, sources said.

The decision was widely expected after LSE last month said it had refused the European Commission's request to divest its majority stake in Italian trading platform MTS.

EU Competition Commissioner Margrethe Vestager will give a press conference on a merger case on Wednesday, although Brussels has not confirmed which case it involves.

"It is likely that the European Commission will block the merger with LSE on Wednesday," a source at Deutsche Boerse told AFP on Tuesday, on condition of anonymity.

An LSE-Deutsche Boerse merger would have created a financial markets behemoth competing with the likes of the Chicago Mercantile Exchange and ICE in the United States, as well as the Hong Kong stock exchange in Asia.

"The commission's veto will hardly be a surprise given the amount of problems raised in the in-depth probe," said Jacques Lafitte of the Avisa consultancy that advised the US exchange Nasdaq (Frankfurt: 813516 - news) which opposed the deal.

The blockbuster merger was unveiled to much fanfare last year and vigorously backed by both sides even in face of Brexit.

But concerns grew in Germany after it was revealed that the merged company would be headquartered in a soon to be non-EU London and not Frankfurt.

The proposed tie-up also drew criticism from France, Belgium, Portugal and the Netherlands, fearful for the future of their own stock exchanges, owned by Euronext (Euronext: ENX.LS - news) .

"All the planets aligned to bring this decision," said Benoit Le Bret, a lawyer representing the Paris Europlace trade group.

It is the third time that the Frankfurt and London stock exchanges have tried to tie the knot, following two unsuccessful attempts in 2000 and 2005.

The development could now reignite interest from US-based global markets operator Intercontinental Exchange (NYSE: ICE - news) -- owner of the New York Stock Exchange -- which had decided against bidding for the LSE last May.

Deutsche Boerse, which also operates the Luxembourg-based clearing house Clearstream and the derivatives platform Eurex, this month said it still had global ambitions despite the failure.

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