London Stock Exchange Shareholders Approve Merger With Deutsche Börse 

London Stock Exchange shareholders on Monday voted strongly in favor of a planned $30 billion tie-up with Germany’s Deutsche Börse, but after the U.K.’s decision to leave the European Union, bigger obstacles may lie ahead.

As expected, shareholders controlling 77% of LSE shares voted overwhelmingly—99.9%—to support the deal at a special meeting in London.

The focus will now shift to Deutsche Börse, which is holding a postal ballot for its shareholders that ends on July 12.

Joachim Faber, chairman of the German exchange operator, said he continues “to recommend the transaction to the shareholders of Deutsche Börse.”

However, the surprise decision by U.K. voters to pull out of the EU has created uncertainty over whether the deal can be completed under the existing terms. In a joint statement on June 24, the day after the Brexit referendum, the exchanges said they remained fully committed to the agreed terms and “continue the process of obtaining the necessary approvals.”

They also said a referendum committee consisting of six representatives of both companies—including Mr. Faber and his LSE counterpart, Donald Brydon—would meet as needed to assess the impact of the Brexit vote on the deal.

If both sets of shareholders end up approving the merger, other hurdles will need to be overcome.

BaFin, Germany’s main financial regulator, isopposed to terms of the deal that place the combined group’s headquarters in London. Felix Hufeld, BaFin’s president, said last month that “without doubt…it is hard to imagine that the most important exchange venue in the eurozone would be steered from a headquarters outside the EU.”

“There certainly has to be an adjustment here,” he added.

BaFin is one of 20 regulators around world that needs to approve the deal, though it doesn’t have veto power. That rests with the finance ministry of the German state of Hesse, one of the regulators that oversee Deutsche Börse.

When asked by a shareholder at Monday’s vote about antitrust and political approvals, Mr. Brydon said the exchange was “engaged in the process” and added “we’re confident we’ll pass satisfactorily”.

Chief Executive Xavier Rolet said the LSE had over the past six or seven years built itself into a “globally competitive group” and that it was “exceedingly well-positioned regardless of the outcome” of the merger.

Source: WSJ

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