London exchange defends Deutsche Boerse deal after Brexit

[LONDON] The London Stock Exchange Group (LSEG) asked its shareholders to back a US$27 billion merger with Deutsche Boerse on Monday, dismissing concerns it was "shackling itself to a corpse" after Britain voted to leave the European Union.

LSEG chairman Donald Brydon told an extraordinary meeting of shareholders, called to vote on the all-share merger to create one of the world's biggest bourses, that he was confident of "satisfactory" regulatory approval for the deal from Brussels.

"There is no reason to think otherwise today," Mr Brydon said.

Some 50 shareholders gathered for the subdued, short meeting. It was free of demonstrations, with only two questions asked.

Dinesh Jain, an individual shareholder, asked why, given that Britain was leaving the EU, "do we want to shackle ourselves to a corpse".

The exchange should abandon the merger as it seemed "unlikely" that Germany would now approve it given that Britain would be outside the EU, Mr Jain said.

LSEG should instead to be looking to do deals with "lively" Asian or Latin American exchanges, Mr Jain said.

He also asked whether any American or other exchange had made a counterbid, and about any threat to LSEG's business from French President Francois Hollande's desire to repatriate euro-denominated clearing to the euro zone.

Mr Brydon said Mr Hollande's comments were a measure of how valuable LSEG's operations were.

"You are quite right, there are some people already seeking to pick over the bones of the UK very, very rapidly indeed. Everyone would be wise to take things a step at a time in this area," Mr Brydon said. LSEG's LCH.Clearnet is the main clearing house in Europe for euro denominated swaps.

Mr Brydon denied that LSEG had received any approaches from any company other than Deutsche Boerse.

Britain would remain in the EU for at least another two years, during which there was ample time to work out the "optimal structure" for the deal, Mr Brydon said.

Last week German markets regulator BaFin said it was hard to see how the head office of the merged group could still be in London given that Britain was leaving the EU.

LSEG chief executive Xavier Rolet said the group was "extremely well positioned" globally no matter what the outcome of British negotiations with the EU on new trading terms.

The deal needs at least 75 per cent in value of shares voted to pass. It is the third attempt by the LSE to merge with Deutsche Boerse in some 16 years.

The result of the vote will be announced later on Monday. Deutsche Boerse is also asking its shareholders to back the deal in a postal vote that closes on July 12.

REUTERS