The London Stock Exchange said late Sunday that its merger with Frankfurt's Deutsche Boerse AG is unlikely to succeed and called demands from competition authorities in the European Union "disproportionate".
In a statement published on its website, the exchange operator said that it was asked by the EU to sell 60% of its MTS government bond trading platform in order to comply with concerns that the €29 billion merger could hamper competition in the region's financial services sector. The LSE had until Monday Feb. 27 to comply with the request.
"Following dialogue with Italian authorities about the Commission's required remedy and given prior discussions between the principals and Italian authorities regarding LSEG's Italian businesses in the context of the Merger, the LSEG Board believes that it is highly unlikely that a sale of MTS could be satisfactorily achieved, even if LSEG were to give the commitment," the statement said.
"Taking all relevant factors into account, and acting in the best interests of shareholders, the LSEG Board (Sunday) concluded that it could not commit to the divestment of MTS. LSEG will therefore not be submitting a remedy proposal with respect to MTS," the statement continued. "Based on the Commission's current position, LSEG believes that the Commission is unlikely to provide clearance for the Merger."
An end to the merger would mark the third time the Deutsche Boerse had failed to either buy or combine with the LSE, following unsuccessful attempts in 2000 and 2005. It would also be the sixth time a takeover or a merger with the LSE was undone, either by regulators or shareholders, in the past 16 years.
