Leadership Question

Deutsche Börse-LSE Merger Sparks Debate

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Analysts were divided Wednesday over whether the Deutsche Börse and the London Stock Exchange would successfully pull off their proposed merger of equals to create the world's No. 2 or 3 trading platform. Much will come down to the ability of both CEOs, Carsten Kengeter of the Deutsche Börse, and Xavier Rolet of the LSE, to sell the deal.
  • 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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A day after Deutsche Börse and the London Stock Exchange announced plans to merge, debate raged in the German and British financial capitals over the wisdom and terms of the proposed deal.

Pundits and financial experts questioned the exchanges’ plans to enter a “merger of equals” dominated by the German exchange but with the key decision-making split, Solomon-like, equally between the two platforms.

In Frankfurt, where Deutsche Börse is based, a columnist for the Frankfurter Allgemeine Zeitung newspaper criticized the deal’s proposed concessions to the British exchange, saying such a fusion wouldn’t make sense unless the headquarters of the combined operation was based in Frankfurt, not London.

The two exchanges on Tuesday indicated that they would run dual headquarters in London and in Eschborn near Frankfurt, where Deutsche Börse has its headquarters, according to information obtained by Handelsblatt.

“It should be clear that the new combined exchange can only have its headquarters in Frankfurt and that the chief executive should only be someone from the Deutsche Börse,” wrote Daniel Mohr, a columnist for the FAZ.

If those conditions weren’t met, Mr. Mohr wrote, then “the price for the merger would be too high.”

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