LSE-Deutsche Börse merger in jeopardy over EU antitrust demand

London Stock Exchange precipitated breakdown in negotiations, say sources

The LSE was unwilling to meet a surprise demand to sell its 60 per cent stake in  Italian bond-trading venue MTS, people close to the merger talks said. Photograph: Matthew Lloyd/Bloomberg

The LSE was unwilling to meet a surprise demand to sell its 60 per cent stake in Italian bond-trading venue MTS, people close to the merger talks said. Photograph: Matthew Lloyd/Bloomberg

 

The near-collapse of the €29 billion merger between the London Stock Exchange Group and Deutsche Börse was caused by the LSE’s decision to aggressively reject concessions demanded by Brussels without warning or consulting its German partner.

Both exchanges took turns apportioning blame to European Union authorities and obstinate rivals yesterday, making clear that the deal once touted as creating a European champion to challenge their larger American rivals was all but dead.

Although both sides blamed outsiders for the failure, people briefed on negotiations said the breakdown was precipitated by LSE, which resisted a last-minute demand from Brussels in a letter to antitrust regulators on Thursday. The demand was finally rejected late on Sunday after an all-day board meeting.

The UK exchange was unwilling to meet a surprise demand to sell its 60 per cent stake in MTS, a small Italian bond-trading venue, on concerns about its ties with local regulators. Deutsche Börse was taken aback by the LSE’s sharp turn, believing MTS was divestible, according to people close to the talks.

Executives and advisers now see little chance of the deal surviving. LSE’s stance has led to German claims that the UK bourse wanted out entirely and was using Brussels’ demands as an excuse. Hostility to the deal in the UK and Germany has risen since Brexit. – (Copyright The Financial Times Limited 2017)