London Stock Exchange and the Frankfurt stock exchange operator, Deutsche Börse, announced Wednesday that they had agreed to an all-share merger that would create Europe’s largest securities market operator. LSE’s shareholders will own 45.6 percent of the combined group, named UK TopCo, while Deutsche Börse stockholders will get the remaining 54.4 percent.
The newly formed pan-European entity, which would be worth an estimated $30 billion, would keep both the London and Frankfurt headquarters.
“Strengthening the link between the two leading financial cities of Europe, Frankfurt and London, and building a network across Europe with Luxemburg, Paris and Milan will strengthen European capital markets,” Deutsche Börse CEO Carsten Kengeter said in a statement released Wednesday. “It is the logical evolution for our companies in a fundamentally changing industry.”
This is the third attempt to combine the London and Frankfurt stock exchanges. Previous attempts failed in 2000 and 2005.
The deal would bring the Euro Stoxx 50 Index, London’s FTSE 100 Index and Germany’s DAX Index under a single roof. The companies predicted they would have cost savings, or synergies, of 450 million euros ($499 million) each year after the deal is completed.
The London Stock Exchange and Deutsche Börse also said they believe the combined company would be “well positioned to serve global customers” irrespective of the outcome of the impending vote on the U.K.'s future in the European Union. However, a vote to leave the 28-nation bloc could “well affect the volume or nature” of business carried out by the combined company.
The transaction may still be derailed by competition concerns. Four years ago, Deutsche Börse dropped plans to merge with Intercontinental Exchange — parent of the New York Stock Exchange, which has also shown interest in LSE — because European antitrust regulators threatened to block that deal.
The transaction is expected to close by the end of this year or during the first quarter of 2017.