Blocked, Germans’ bid to buy London Stock Exchange
A GERMAN takeover of the London Stock Exchange has collapsed after being blocked by competition chiefs.
The Deutsche Boerse had sought to buy the 126-year-old institution in a £21billion deal.
But yesterday regulators concluded that the tie-up would create a monopoly – dealing a death blow to a plot plagued by problems from the start.
The European Commission demanded the LSE sell its Italian trading platform to alleviate concerns the takeover would create an all-powerful juggernaut. But, having already agreed to sell a Paris-based clearing house to a major rival to ease fears, this was a step too far for the exchange.
Tough- talking competition commissioner Margrethe Vestager, who has previously taken on tech giant Apple and blocked a deal between mobile firms Three and O2, officially vetoed Frankfurt-based Deutsche’s plans yesterday.
‘ The European economy depends on well- functioning financial markets,’ she said.
‘That is not just important for banks and other financial institutions. The whole economy benefits when businesses can raise money on competitive financial markets.
‘The merger between Deutsche Boerse and the London Stock Exchange would have significantly reduced competition by creating a de facto monopoly in the crucial area of clearing of fixed income instruments.’
Miss Vestager’s announcement was welcomed by British critics of the deal, who fought a long campaign to block it in the face of ferocious lobbying by highly-paid spin doctors.
They warned that appointing a German boss and giving Deutsche shareholders a controlling state would give Frankfurt a malign influence over the City. These fears grew particularly strong after the Brexit vote as there were worries the EU might use it as a bargaining chip.
The Mail has consistently opposed the deal, arguing that it was against the national interest
Tory MP Sir Bill Cash, who was also an outspoken opponent of the
‘Brexit killed this deal off’
plans, said: ‘This is brilliant news. It just goes to show that getting this out into the open, for which the Mail deserves enormous credit, has made a huge difference.’
The deal had also been under ferocious attack in Frankfurt as politicians demanded the businesses abandoned a promise to base their merged headquarters in London.
Neil Wilson of ETX Capital said: ‘Brexit effectively killed this deal off nine months ago. There were always fierce arguments about the location of the HQ and clearing and the deal never really sat well with regulators.’
The failure of the takeover leaves the future of both firms’ bosses in doubt. Xavier Rolet, the 57-year-old Frenchman at the helm of LSE, was due to step aside if the plan went ahead so Deutsche chief Carsten Kengeter could take the helm.
Mr Rolet could come under pressure to quit after failing to deliver on a plan that he enthusiastically backed from the start.
Mr Kengeter, 49, is already under pressure as prosecutors determine whether he will be indicted over insider trading charges.
He bought £3.8million of Deutsche shares in December – a month before the two exchanges began official talks on a takeover.
He denies any wrongdoing and says he bought the shares under the instructions of his board as part of a bonus scheme.
Yesterday, both firms expressed their disappointment in public statements. LSE said it disagreed with the commission’s decision but added: ‘LSE is confident in its prospects as a stand-alone business and its strategy for growth continues to deliver strong results.’
Deutsche chairman Joachim Faber said: ‘The prohibition is a setback for Europe, the capital markets union and the bridge between continental Europe and Great Britain. A rare opportunity to create a global market infrastructure provider based in Europe and to strengthen the global competitiveness of Europe’s financial markets has been missed.’