Germany’s Finance Minister Relays Sentiments On LSE – Deutsche Borse Merger

Wolfgang Schäuble has stated that the location of its headquarters is not the most important question hanging over the deal.

German finance minister, Wolfgang Schäuble, has relayed his sentiments on the controversy surrounding Deutsche Borse’s planned merger with the London Stock Exchange Group (LSE).

Finance Magnates reported on Monday that the merger between the LSE and Deutsche Borse could hinge on Brexit negotiations. Schäuble has since stated that the location of its headquarters was “not the most important” question hanging over the deal.

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He also told journalists in Berlin that he was keen to ensure that the merged exchanges group would be subject to EU law, even though the UK is preparing for Brexit.

He added: “What is important is what business areas stay in Frankfurt and which ones in London. I think it is right that the responsible authorities look at this closely. But ultimately these decisions have to be taken, within the framework of the applicable rules by the companies involved.”

His comments come as the window for Deutsche Börse’s shareholders to tender their shares in favour of the deal is approaching a close on 12 July. Those close to the deal are expecting to reach the 75 percent threshold required for the merger to be approved.

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LSE shareholders have already voted in favour of the merger.

One of the World’s Largest Exchanges

If the deal proceeds, it would create one of the world’s largest exchange operators, with a London-based holding company, a German head, Deutsche Börse’s Carsten Kengeter and a combined valuation of €24.4 billion.

The UK’s vote to leave the EU has, however, prompted further resistance from German politicians and regulators who have raised objections to locating key parts the country’s financial infrastructure outside the EU.

Germany’s financial watchdog, BaFin, said that it was “hard to imagine” the combined group could be “steered from a location outside the EU”.

Concerns

Deutsche Börse has been looking for ways to allay such concerns and said earlier this week that a joint committee would be set up with the LSE to deal with the implications of the Brexit vote which would make recommendations to ensure it met “all regulatory requirements to secure closing of the transaction”. This would include the possibility of setting up two holding companies, one of which would be in the EU, rather than just one in London.

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