London Stock Exchange has agreed a deal to take a 60 percent stake in loss-making trading platform rival Turquoise and will merge it with its own dark pool platform, Baikal, to create a new pan-Europe venture.
In a statement on Tuesday, the LSE said it agreed to fully fund the cash needs of the new venture for the first two years following completion of the deal and intends to bring the business to sustainable profitability.
The LSE will incur exceptional costs of up to 20 million pounds ($32.4 million) resulting from the deal in the current year, reflecting the cost of restructuring and integration. In 2008, Turquoise made a pretax loss of 15.7 million pounds ($25.4 million).
Dark pools -- venues for trading shares anonymously away from a stock exchange -- have been gaining market share from bourses, and have sparked concerns from regulators about poor market transparency.
The LSE said in October it was in exclusive talks with Turquoise, which was launched last year by a group of nine investment banks frustrated by the LSE's refusal to cut fees. While loss-making, it gained about a 7 percent market share.
Citi , Goldman Sachs , Credit Suisse , Deutsche Bank , BNP Paribas , UBS , Merrill Lynch , Morgan Stanley and Societe Generale all back Turquoise.
(Reporting by Matt Scuffham; Editing by Lorraine Turner)