Published On: Mon, Jul 11th, 2016

Deutsche Boerse, LSE mull lowering key hurdle for merger

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Index funds represent up to 15% of Deutsche Boerse shares  © AFP/File Daniel Roland

Index funds represent up to 15% of Deutsche Boerse shares
© AFP/File Daniel Roland

Frankfurt (AFP) – The Frankfurt stock exchange said on Monday that it is examining whether to lower a key hurdle for its planned merger with the London Stock Exchange (LSE) to go ahead.

The shareholders of German stock market operator Deutsche Boerse have until Tuesday to decide whether to swap their shares for shares in the new merged company.

London Stock Exchange Group shareholders already voted overwhelmingly for the tie-up last week, despite concerns it could be scuppered by Britain’s EU exit.

Under the terms of the deal, 75 percent of Deutsche Boerse shareholders must agree to swap their shares for the deal to go ahead.

But the company said in a statement that it was examining lowering the minimum acceptance threshold for technical reasons, in order to allow index funds to participate in the offer.

Index funds, which represent up to 15 percent of Deutsche Boerse shares, are only technically capable of tendering their shares after the minimum acceptance threshold has been reached, it explained.

And the replacement of the shares takes two days.

However, most institutional shareholders only tendered their shares on the last day of the initial offer period, which meant the respective threshold would not be achieved prior to that day. And the replacement of the shares would take place after the end of the initial offer period, Deutsche Boerse explained.

The central atrium of the London Stock Exchange LSE (top photo) and the trading floor of the Deutsche Boerse German stocks operator in Frankfurt am Main  © AFP/File Leon Neal, Daniel Roland

The central atrium of the London Stock Exchange LSE (top photo) and the trading floor of the Deutsche Boerse German stocks operator in Frankfurt am Main
© AFP/File Leon Neal, Daniel Roland

“By reducing the acceptance threshold that technical issue could be addressed,” it said.

It insisted that no decision has been made in this regard yet.

“On Monday, the facts then known will be finally evaluated by the parties involved. Only then will a decision by the relevant bodies of the parties involved be made if the acceptance threshold will be lowered or not.”

Last week, a total 99.89 percent of LSEG shareholders supported the merger.

Pending the approval of Deutsche Boerse shareholders, the two companies plan to seal the tie-up and create one of the world’s biggest stock exchanges before the end of the month.

Under the agreed terms, Deutsche Boerse shareholders will end up with 54.4 percent of the new holding company’s capital, and LSE shareholders with 45.6 percent.

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