The London Stock Exchange Group stuck to its guns yesterday over its planned merger with Deutsche Boerse, saying the deal would be derailed by neither regulators nor any British exit from the European Union.
In its first annual shareholder meeting since mapping out a plan in February to create a $30bn cross-border exchange group, the group tried to ease concerns over the tie-up.
Analysts have questioned whether EU competition regulators would approve the deal given the large presence the merged group would have in clearing derivatives trades.
“We wouldn’t be embarking on a merger if we thought there would be any problems,” LSEG chairman Donald Brydon said in response to a shareholder’s question on clearing. Britain, home to Europe’s biggest financial centre, votes on June 23 on whether to remain in the EU. Any vote in the referendum to leave the bloc could create major uncertainty for the country’s financial services industry.
Asked if he thought a UK exit from the bloc or “Brexit” would affect the planned merger, Brydon replied: “No”.
Brydon still expects the merger to be completed by the end of 2016 or early in 2017.
The US-based Intercontinental Exchange said in March it was considering a counter-offer for LSEG.
LSEG chief executive Xavier Rolet remained silent throughout yesterday’s meeting, following comments he made in a media interview that were critical of ICE.
The company issued a “clarification statement” on Monday after discussions with Britain’s Takeover Panel about recent comments made by Rolet, who will retire if the deal goes ahead.
It said Rolet’s views in one interview regarding ICE were his own, and that he has held no discussions with the US exchange regarding its strategy. ICE was not mentioned at yesterday’s meeting, which focused on matters such as cyber threats, climate change and how to get more listings.
LSEG is due to hold an extraordinary general meeting of shareholders in the coming weeks to vote on the merger. ICE would have to present any bid a week before that meeting.
LSEG reported a rise in first-quarter revenue yesterday, helped by growth at its FTSE Russell, capital markets and clearing units.
The company, which also owns Borsa Italiana, said revenue rose 8% to £358.9mn ($522.4mn) in the three months to March 31, beating company-supplied average estimates of £350.1mn. Revenue at its capital markets division, which makes money from fees paid by companies listing on its markets and trading of stocks and bonds, rose 8% to £92.4mn.
LCH.Clearnet, the clearing house controlled by LSEG, saw revenue increase by 14% with growth coming from a rise in volumes of over-the-counter derivative products.
Revenue from information services, which includes the FTSE index business, rose 10% to £141.5mn. Technology services provided the only weak spot, with revenues down 17%, hurt mainly by the timing of customer deliveries.
People walk through the lobby of the London Stock Exchange. The LSE stuck to its guns yesterday over its planned merger with Deutsche Boerse, saying the deal would be derailed by neither regulators nor any British exit from the European Union.
