Two major European stock exchange operators - Deutsche Boerse AG and the London Stock Exchange (LON: LSE) Group Plc (LSEG) - agreed to merge. The combined company will be registered in the UK, according to a press release from Deutsche Boerse.
The merger will take place through the exchange of shares, which, in the case of its successful completion will lead to the creation of Europe's largest securities market operator with a market capitalization of more than $ 30 billion.
In accordance with the terms of the transaction, Deutsche Boerse shareholders will receive about 54.4% of the combined company, and LSEG – 45.6%.
The combined company's board of directors will include an equal number of representatives from Deutsche Boerse and LSEG. Chairman of the Board of Directors of the combined company will be Donald Brydon, who heads currently LSEG Board of Directors.
Chief Executive Officer of Deutsche Boerse, Carsten Kengeter, will become CEO of the combined company, according to a press release.
The merger of Deutsche Boerse and LSEG will allow the exchange operator to significantly reduce costs. The synergistic effect of the deal after its completion will be around 450 million euro per year, said Deutsche Boerse in its report.
The companies expect to achieve cost savings through increased use of technology, removing overlapping functions and optimization of a number of business segments.
The combined platform will be able to compete with global giants, in particular, with CME and the Intercontinental Exchange, which were formed as a result of merger wave.
Merging the two European sites may hinder competitors and regulators, experts warn.
So, earlier this month the US Intercontinental Exchange Inc. (ICE) reported that studies the possibility of submitting their own proposals for the purchase of LSEG - operator of the London Stock Exchange (LSE).
Deutsche Boerse is the third time trying to buy the London Stock Exchange; previous attempts were undertaken in 2000 and 2005.