Today, the EU Commission informed Deutsche Börse AG and the London Stock
Exchange Group plc that it has decided to prohibit the planned merger of
the two companies in spite of the remedial measures offered by both companies.
HLDCO123 will publish the termination of the exchange offer and will unwind
the exchange offer in accordance with the terms of the exchange offer.
Deutsche Börse regrets the decision taken by the European Commission.
Joachim Faber, chairman of the Supervisory Board of Deutsche Börse AG, said: “The
prohibition is a setback for Europe, the Capital Markets Union and the
bridge between continental Europe and Great Britain. A rare opportunity to create
a global market infrastructure provider based in Europe and to strengthen the
global competitiveness of Europe’s financial markets has been missed.”
Carsten Kengeter, CEO of Deutsche Börse AG, added: “Deutsche Börse is
well-positioned on a stand-alone basis to compete at a global level with
other market infrastructure players. We will continue to pursue our growth
strategy, to strengthen our innovation capabilities and to even better serve market
and customer needs. Through this strategic approach we want to create added
value for our clients and shareholders and contribute to the positive development
of Frankfurt as financial centre.”
Graham Spooner, investment research analyst at The Share Centre, explains what it could mean for investors: “London Stock Exchange shares are up by around 3.5% following on from the unsurprising news that that the proposed merger with Deutsche Boerse has been blocked by the European Commission as they thought it would have created a monopoly.
“Ever since the Brexit decision last year, questions were raised over the viability of the £21bn deal between the London Stock Exchange and its German counterpart. When the LSE refused to sell its stake in its fixed income trading platform, some may say the writing was on the wall. The LSE said today that it regrets the decision and will now move on starting with a £200m share buyback and that it is confident of its prospects as a standalone business.
“Interested investors may want to acknowledge that the share price has powered ahead over the last five years on the back of improving markets, leading to higher volumes of trading, new issues and fund raising and recently merger and bid news. Diversification has been a key, with the acquisition of Frank Russell, an index group, and an increased holding in clearing house LCH Clearnet. We continue to recommend London Stock Exchange shares as a ‘hold’ for medium risk investors seeking growth.”