London Stock Exchange Group Plc (LON: LSE) announced in a statement early Friday that they would continue to merge with Deutsche Börse AG (FRA: DB1) despite Brexit.
However, the question of the location for the holding company was one of the issues the committee needs to consider.
LSE and Deutsche Börse agreed to merge in March to create a European trading powerhouse in a $30 billion deal. The holding company was planned to locate in Britain, and the headquarters would be in both London and Frankfurt. After Britain’s vote to leave European Union, both sides announced on early Friday that they would go ahead with the merge, and as stated in the shareholder documents published on 1 June 2016, the all-share merger of London Stock Exchange and Deutsche Börse is not conditioned on whether Britain leaves EU.
Although the merger is still on the way, Brexit has influence on the issue of the location of holding company. After the Brexit, the London base for the holding company is becoming more and more controversial. Michael Fuchs, a leading politician in Chancellor Angela Merkel's CDU party, urged German government to make sure that the combined group of both sides would be outside Britain. “Out is out, there cannot be a London base for the merged company after the Brexit.” Fuchs said.
On Friday, both LSEG and Deutsche Börse demanded their shareholders to back the deal. LSEG’s shareholders are asked to vote on the merger on 4 July 2016 at a general meeting, and Deutsche Börse’s shareholder can tender their shares until the end of the exchange offer period on 12 July 2016. A special committee chaired by Joachim Faber, Chairman of Deutsche Börse, was also established to discuss the implication of Brexit, they would meet as often as needed to handle the implication of Brexit.
“The decision of the UK to leave the EU makes it ever more important to maintain and foster ties between the UK and Europe. We are convinced that the importance of the proposed combination of Deutsche Börse and LSEG has increased even further for our customers and will provide benefits for them as well as our shareholders and other stakeholders.”Joachim Faber said.
“I look forward to working with my new colleagues to create an industry-defining combination which will be a leading global market infrastructure business anchored in Europe.” said Donald Brydon, Chairman of the Board of London Stock Exchange Group Plc and Chairman Designate of the Combined Group.
According to Reuters, shares in Deutsche Börse fell 7 % by 12:22 GMT, while LSE's stock was down 8.7 percent.