Category Archives: LSE-Deutsche Borse Merger P.O

P.O. (BBG) Don’t Blame Italy for LSE-Deutsche Boerse Deal Flop, Rome Says

P.O.  

I  refer you to my numerous Personal Opinions on this issue.

This deal was dead even before it was was born.

Please consider the facts:

According to the proposed deal the UK would be effectively selling the London Stock Exchange, which is one of it’s Crown Jewels, and the heart of the City, to it’s historic enemy Germany.

The City accounts for more than 25% of the UK’s GDP.

And the UK would be selling it’s heart and command to Germany, it’s arch-rival and the de facto leader of the EU which the UK decided to leave…

And Germany being the Member State that proposes the hardest terms and conditions for the UK’s exit.

And what a suicidal idiocy it would have been!

Francisco (Abouaf) de Curiel Marques Pereira

(BBG) Italian regulators say they’re not responsible for Deutsche Boerse AG’s all-but-dead acquisition of London Stock Exchange Group Plc, a failure that would add to the already sizable graveyard for such merger attempts.

LSE said Sunday that a regulator-required divestment of its MTS trading platform in Italy — after dialogue with officials there — was one step too far, making the deal unlikely to
proceed. But LSE made that decision on its own, and authorities in Rome were never asked to authorize the sale, a spokesman for the Italian Finance Ministry said Wednesday.

LSE declined to comment beyond Sunday’s statement.

Fingers are being pointed as the companies reckon with the likely demise of their year-long attempt to create Europe’s biggest exchange operator. While shareholders have backed the
deal, approval by antitrust regulators in Brussels has been one of the the biggest hurdles.

LSE said it couldn’t sell fixed-income platform MTS, which plays an important role in trading Italian government bonds. Based on talks with Italian officials, LSE said it was “highly unlikely” that a satisfactory sale could be achieved and that such a move would hurt its relationships with those regulators. Politico first reported Rome’s stance.

LSE also cited other factors behind its decision not to try to sell MTS. The London exchange company pointed to the platform’s “systemic” importance in Italy and the importance of LSE’s overall Italian operations to its revenue.

Deutsche Boerse, meanwhile, was prepared to sell MTS and didn’t see the divestment as a problem, according to people familiar with the plans. An official at Hesse, which has a say
in any Deutsche Boerse merger, said the MTS story might have even been an LSE excuse to end the deal talks and blame European regulators instead.

German officials have remained steadily opposed to the companies’ plan to base the new company in London. The headquarters issue became more urgent after Britain’s Brexit
vote, Hesse premier Volker Bouffier said Tuesday.

Deutsche Boerse Chief Executive Officer Carsten Kengeter on Wednesday said he “regrets” LSE’s decision that will likely end their proposed combination, adding that the company is still looking for ways to climb to the top of the industry.

“Standing still is not an option,” the CEO said, echoing remarks he made before the $13 billion takeover’s near collapse over the weekend.

+++ P.O. (Times) LSE-Deutsche Borse: How mega-merger came apart at last minute

P.O.

This deal is not crumbling, it’s dead and buried!

Actually it was always dead before it was even born.

Having been part of the two previous consolidation attempts, I think I have an idea on what I am talking about…

Please see my +++ P.O. (EurActiv) EU set to block stock market mega merger
and the links to my three P.O. on this issue.

Francisco (Abouaf) de Curiel Marques Pereira

(Times) Stock exchange deal has cost millions in fees but all the work may be in vain.

If the merger with Deutsche Börse collapses it will mean that a year of neg­otiations and hundreds of millions of pounds of advisory fees will come to naughtMICHAEL GOTTSCHALK/GETTY IMAGES
 

It is hard to believe that less than three weeks ago the London Stock Exchange and Deutsche Börse were gushing about their “constructive engagement” with the European Commission.

The two exchanges, which had hoped to become a dominant global bourse by joining forces in a £24 billion “mega-merger of equals”, said last month that they had made several commitments to Europe’s competition authority that were about to be market tested. It appeared that all was on track.

Now, however, the merger seems dead in the water amid allegations of European politicking by France, Germany and Italy. An 11th-hour request by the European Commission that the LSE sell its majority stake in MTS, a “systemically important” Italian business that is a leading platform for trading European wholesale government bonds, has virtually scuppered the deal.

Thoughts that America’s Intercontinental Exchange, which owns the New York Stock Exchange, would bid for the LSE were largely dismissed yesterday because of the political environment and the seemingly protectionist sentiment of the British government.

If the merger with Deutsche Börse collapses it will mean that a year of negotiations and hundreds of millions of pounds of advisory fees will come to naught and be a blow for Xavier Rolet, LSE chief executive, whose support for the deal has bordered on evangelical.

One adviser to the LSE said the commission’s MTS request had not been brought up until recently and said: “This came as a complete shock. It was an unexpected request and we tried hard to get to the bottom of what the areas of concern were. We presented what we believed was an improved and clear-cut structural remedy, which the board [of the LSE] felt very strongly would address their concerns but the commission just wasn’t engaged.”

The LSE has said that it would not sell its MTS stake as it would be detrimental to its business in Italy and trigger other regulatory investigations that may hurt “critically important relationships”. It seems all but certain that the merger will not gain clearance.

Before the commission’s death knell there were signs that the deal was faltering amid heightened political concerns over Brexit and increased tension between the LSE and Deutsche Börse.

Last month the stakes were raised by Deutsche Börse’s bungled publication of a report highlighting the gains that Frankfurt, Germany’s financial centre, could make at the City’s expense from the merger. The LSE said that it would not move jobs to Germany.

There are fears that post Brexit there would be no sense in the LSE being junior partner in a merger where Deutsche Börse would control 54 per cent of the business. Mr Rolet, who had planned to leave after the merger, even warned that it would cost London 100,000 jobs if it lost its euro clearing business.

Opposition has been mounting in Germany to Britain hosting the Deutsche Börse headquarters. Some believe that a police raid of Deutsche Börse’s headquarters as part of an investigation into allegations that Carsten Kengeter, its chief executive, took part in €4.5 million of insider dealing in December 2015, just before the LSE deal was announced, was politically motivated.

Shares in the LSE, which has been advised by banks from Goldman Sachs to Barclays, were about £23 before news of the tie-up leaked last February and yesterday closed at £30.90.

+++ P.O. (EurActiv) EU set to block stock market mega merger

P.O. 

As per my various Personal Opinions, and as I see it, this merger will never happen, full stop.

Please revise +++ P.O./V.I. (FT) Deutsche Börse-LSE tie-up hits opposition:

 

«P.O.

Quod Erat Demonstrandum
(which is what had to be proven)

I wrote several P.O. in which I said that the merger, or better said, the acquisition of the London Stock Exchange by Deutsche Borse, was never going to happen.

My opinion has not changed.»

 

Or the following ones:

+++ P.O. V.V.I. (BBG) Retail Investor Group Warns of LSE-Deutsche Boerse ‘Dominance’

+++ P.O./V.I. (FT) Deutsche Börse-LSE tie-up hits opposition

 

Francisco (Abouaf) de Curiel Marques Pereira

 

 

(EurAcitv) London Stock Exchange (LSE) said its proposed merger with Deutsche Börse AG was unlikely to be approved by the European Commission, leaving the stock market operators’ third attempt at combining on the brink of failure.

The LSE said in a statement late on Sunday (26 February) that the Commission had asked it to sell its 60% stake in fixed-income trading platform MTS to satisfy antitrust concerns over the merger of Europe’s two largest market operators.

Calling the request “disproportionate”, the British exchange said it believed that it would struggle to sell MTS and that such a sale would be detrimental to its ongoing business.

“Based on the Commission’s current position, LSE believes that the Commission is unlikely to provide clearance for the merger,” it said.

The exchange added that it would still work to make the merger with Deutsche Börse succeed, but that would be impossible unless the executive changed its position.

The European Central Bank (ECB) is under increasing pressure to exit its loose monetary policy but the Frankfurt bank remains unconvinced by inflation growth. The institution is also looking into cross-border bank mergers, as the rest of Europe eyes the UK’s post-Brexit scraps.

In a separate statement, Deutsche Börse attributed the decision to LSE alone. LSE “resolved tonight to not commit to the required divestment of LSEG’s majority stake in MTS,” Deutsche Börse said, adding that it expected a final decision from the Commission by the end of March.

The EU executive declined to comment.

The two exchanges announced plans to merge in a €29 million deal just over a year ago, aiming to create a giant trading powerhouse that would better compete against US rivals that were starting to encroach on the pair’s turf.

The exchanges had already agreed to sell part of LSE’s clearing business, LCH SA, in order to satisfy antitrust requirements.

LSE said the Commission had also raised concerns this month about the impact on the European market landscape of access to bond and repo trading feeds were the two exchanges to merge. LSE said it had offered certain proposals to address this but that the Commission had requested they sell all of MTS instead.

The EU executive had given the exchanges until today (27 February) to come up with a proposal to meet that demand.

MTS is a relatively small part of LSE’s business but it is a major platform for trading European government bonds, particularly in Italy, where it is classified as a “systemically important regulated business”.

British small business owners are still undecided on how to vote in the upcoming referendum on the UK’s EU membership, according to a new poll, published as financial leaders warned that Brexit could damage the economy and scuttle Deutsche Börse’s takeover of the London Stock Exchange.

LSE said that such a sale would need regulatory approval from several governments in Europe, and it would be detrimental to its wider Italian business.

“Taking all relevant factors into account, and acting in the best interests of shareholders, the LSE Board today concluded that it could not commit to the divestment of MTS,” the exchange said.

The two exchanges had already negotiated concerns over the UK’s decision to leave the EU but this latest blow could leave the agreement dead in the water.

+++ P.O. V.V.I. (BBG) Retail Investor Group Warns of LSE-Deutsche Boerse ‘Dominance’

P.O.

…The eventual “Dominance” is obvious, and this only one of the reasons for which I think that this acquisition of the London Stock Exchange by Deutsche Boerse should not be authorized.

Because it is not a merger, it’s an acquisition…

Francisco (Abouaf) de Curiel Marques Pereira

(BBG) A European retail investor association is lobbying against Deutsche Boerse AG’s acquisition of London Stock Exchange Group Plc, arguing to officials in Brussels that the deal would damage competition in Europe.

The combined exchange operators would have “super dominance” in the provision of market indexes, exchange-traded funds and clearing, the European Investors’ Association wrote in a letter to European Competition Commissioner Margrethe Vestager. The investor group, started last year, was founded by the Dutch Investors’ Association and the European Financial Education Foundation. Euronext NV operates markets in the Netherlands.

The tie-up would hamper the aims of recent regulations that seek to boost competition and would be harmful to smaller markets, such as those operated by Euronext, the group said.

“The merger will result in a substantial lessening of effective competition and reduction of freedom of choice,” Paul Koster, chairman of the association, said in the letter.

Deutsche Boerse and LSE investors have accepted the deal, which still needs to be approved by both the European Commission and national regulators. In written submissions to the commission, Belgium and Portugal have said they oppose the buyout. In both countries, the national stock exchange is run by Euronext.

“The merger would create a leading Europe-based global markets infrastructure group that helps Europe to maintain and enhance its capital markets infrastructure,” a Deutsche Boerse spokeswoman said in an e-mail. “Linking London, Milan and Frankfurt via liquidity bridges will drive economic growth and job creation and this will support the capital markets union.”

+++ P.O./V.I. (FT) Deutsche Börse-LSE tie-up hits opposition

P.O.

Quod Erat Demonstrandum
(which is what had to be proven)

I wrote several P.O. in which I said that the merger, or better said, the acquisition of the London Stock Exchange by Deutsche Borse, was never going to happen.

My opinion has not changed.

 

Francisco (Abouaf) de Curiel Marques Pereira

 


(FT) Mounting concern about the consequences for the merged entity if Britain votes to leave EU.

Opposition is growing in Germany to Deutsche Börse’s planned $20bn merger with London Stock Exchange, amid mounting concern about the consequences for the merged entity if Britain votes to leave the European Union.

“It’s a problem if the headquarters of the holding company will be outside the eurozone and, if Brexit happens, outside the EU,” said Ulrich Caspar, a member of parliament in the German state of Hesse, where Frankfurt is located. “The terms are detrimental to the development of Frankfurt as a financial centre.”

The deal, unveiled in February, would create one of the world’s largest exchange operators in terms of total income, and one of the biggest for equities listings. It would also risk manage more derivatives trades than any other such entity in the world.

Deutsche Börse’s shareholders would own 54.4 per cent of the combined group, and LSE investors the remainder. The merged company would be headed by Deutsche Börse’s chief executive Carsten Kengeter, but be based in London.

Many in Germany want it to be headquartered in Frankfurt instead, to reflect Deutsche Börse’s larger market capitalisation, as well as the city’s status as home to the European Central Bank and centre of the European single currency’s settlement, clearing and payments.

There is also a fear in Germany that while London is currently one of the world’s big financial hubs, it could forfeit that status if, as a result of the June referendum, Britain quits the EU, leaving the merged company stranded.

“The danger for Frankfurt … is that the headquarters for both stock exchanges will no longer be in an international financial centre, but in a city whose significance worldwide will be declining,” said Clemens Reif, another Hesse lawmaker. He, like Mr Caspar, is a member of Germany’s governing Christian Democrats, which are also the ruling party in Hesse.

However, some big institutional investors based in London disagree. They say that London will remain one of the world’s leading financial centres regardless of whether the UK remains in or outside the EU.

One portfolio manager at a big UK institution said: “Frankfurt is not going to challenge London as a financial hub. The world’s biggest banks, law firms, accountants and trading houses are in London. The company would be better off headquartered in London. The Brexit vote is an irrelevance.”

The issue of Frankfurt’s status could prove decisive for regional authorities who will have a big say over whether the deal goes through. Deutsche Börse’s is overseen by the state of Hesse’s stock exchange regulator, which will assess the tie-up.

Hesse’s economics ministry said in February that the regulator could block the proposed merger if it impaired Frankfurt’s ability to operate a stock exchange and further develop the business.

Last month, Hesse’s prime minister, Volker Bouffier, said the regulator needed to establish whether Hesse could continue to supervise the stock exchange if the holding company were headquartered in London, adding that it would be “desirable” for the group to be based in Frankfurt.

Mr Kengeter has sought to reassure the German authorities, saying last month that Deutsche Börse’s was in “very detailed” discussions with the Hesse government, and the two sides were “agreed that we want to promote Frankfurt as a financial centre”.hjtyerrk