European Giant

Deutsche Börse and LSE in Merger Talks

Kengeter-AlexanderHeinlDPA
Carsten Kengeter, Deutsche Börse's chief executive, is embarking on his most ambitious merger yet.
  • Why it matters

    Why it matters

    By merging with London Stock Exchange, Deutsche Börse hopes to create a global stock exchange leader that can challenge its bigger U.S. rivals.

  • Facts

    Facts

    • The companies are valued at more than €24 billion, with Deutsche Börse’s market capitalization at more than €14 billion and LSE at about €10 billion.
    • Deutsche Börse’s shareholders would end up with 54.4 percent of the shares and LSE with 45.6 percent of shares in the combined group.
    • Deutsche Börse CEO Carsten Kengeter last week said his goal is to become number one or number two across all major divisions globally.
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    Audio

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Third time’s the charm? That seems to be the motto for two of Europe’s largest stock exchange operators.

Germany’s Deutsche Börse and the London Stock Exchange confirmed Tuesday that they are in merger talks in a move that would potentially create Europe’s largest trading platform.

“The boards believe that the potential merger would represent a compelling opportunity for both companies to strengthen each other in an industry-defining combination, creating a leading European-based global markets infrastructure group,” the companies said in a joint statement posted on LSE’s website.

The statement said the two were discussing a “merger of equals,” though Deutsche Börse currently has a higher market value and its shareholders would hold a nominal majority in any new holding company. The newly created firm would have a single executive board with equal numbers of Deutsche Börse and LSE managers represented.

Together, the companies are valued at more than €24 billion, or $26.4 billion, with Deutsche Börse’s market capitalization at more than €14 billion and LSE at about €10 billion.

Both sides have been here before, once in 2000 and again in 2004, while Deutsche Börse has also sought another ambitious merger in the meantime: In 2011, the German firm hoped to merge with NYSE Euronext, but the European Commission thwarted the plan, claiming it would hinder competition in Europe.

Those past failures haven’t stopped investors from hoping that this time could be different. LSE’s shares rose as much as 15 percent on news of the possible merger when it was first reported by Reuters in the early afternoon. By 4:30 p.m. in Frankfurt, Deutsche Börse’s shares were up nearly 4.5 percent to €79.75, while LSE shares climbed nearly 15 percent.

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