Deutsche Börse Shareholder Approval Now a Fact, but Deal Prospects Grim

The merger between the London Stock Exchange and Deutsche Börse is on its way to get final shareholder approval

Shareholders of Deutsche Börse have been much more reluctant to approve the merger deal with the London Stock Exchange (LSE) than its counterparts across the English Channel. After a special amendment that only required the approval of 60 per cent of shareholders instead of the original 75, the deal is finally looking to take shape.

As of 40 minutes ago, Reuters has reported that Deutsche Börse’s shareholders are likely to receive the approval of its stakeholders to proceed with the LSE merger. With over 60 per cent gained, the first hurdle for this transaction that has become increasingly difficult following the Brexit vote is now clear.

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Regulatory Challenges Remain High

The $27 billion merger has been challenged by some German politicians in the aftermath of the vote. The more difficult aspect of the deal now would be to get anti-trust approval from the European Union authorities, German financial regulator BaFin and the United Kingdom’s Financial Conduct Authority (FCA).

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The German watchdog has been the first to voice its concerns about the location of the new headquarters of the entity, which are set to be in London. With the United Kingdom leaving the European Union, BaFin is considering the move to be unacceptable.

On a different end of the spectrum, Portuguese and Belgian authorities have been pressuring European anti-trust authorities to prevent the deal, arguing that the newly formed entity will make access to financial markets in smaller countries more difficult.

While European and UK regulators are holding the keys to the deal, both sides have expressed flexibility on the terms of the merger agreement, aiming to sweet-talk the supervisory authorities into approving the merger.

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