The grand merger between the London Stock Exchange Group (LSEG) and Deutsche Börse seems to be all but dead, unless some major changes are announced.
The LSEG Board today revealed that it would not commit to the divestment of MTS S.p.A (an electronic trading platform for European wholesale Government Bonds and other fixed income securities) as the European Commission requires it to approve the deal. The LSEG believes that the Commission is unlikely to provide clearance for the merger under these conditions.
Explaining the decision, the group says that MTS is a systemically important regulated business in Italy due to its significant role in the trading of Italian Government bonds and other securities. Although MTS is not in itself a major contributor to LSEG Group revenues, the LSEG’s Italian businesses represent a significant proportion of its revenues and profitability.
Following dialogue with Italian authorities regarding the 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 it were to give the commitment. Moreover, the LSEG board believes that the offer of such a remedy would jeopardise the LSEG’s critically important relationships with these regulators and be detrimental to the LSEG’s ongoing businesses in Italy and the group, were the merger to be completed.
Nevertheless, the LSEG board says that it remains convinced of the strategic benefits of the merger and recognises the strong support from shareholders for the transaction. The LSEG will continue to take steps to seek to implement the merger.