Frankfurt (AFP) – The Frankfurt stock exchange on Monday removed a potential spanner in the works for its planned merger with the London Stock Exchange (LSE) by lowering the measure of support needed from its own shareholders for the deal to go ahead.
Deutsche Boerse said that only 60 percent of shareholders must now agree to the deal to create one of the world’s biggest stock exchanges, instead of the original “minimum acceptance threshold” of 75 percent.
In addition, the deadline for Deutsche Boerse shareholders to swap their shares for new shares in the merged company had been extended from July 12 until July 26, the group said in a statement.
London Stock Exchange Group shareholders already voted overwhelmingly for the tie-up last week.
Deutsche Boerse insisted the move was purely a technical matter, but sources said only around 25 percent of shareholders have swapped their shares.
The exchange said it wanted to ensure that key index funds could 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.
Since institutional shareholders often tender their shares on the last day of offer periods, it meant the respective threshold would not be achieved prior to that day and index funds would thus have no time to participate, said Deutsche Boerse.
– ‘Purely technical’ matter –
“This change in procedure is a purely technical one. We are confident that we will reach the 75 percent threshold in the course of the full tender process,” said Deutsche Boerse’s chief financial officer, Gregor Pottmeyer.
Last week, a total 99.89 percent of LSE shareholders supported the merger.
Deutsche Boerse shareholders now have until July 26 to decide whether to swap their shares.
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.
Investors appeared to welcome the move.
In mid-afternoon trading on the Frankfurt stock exchange, Deutsche Boerse shares were showing a gain of 1.93 percent at 73.35 euros, outperforming the overall market slightly.
Another possible headache for the two companies’ merger plans is the British vote on June 23 to quit the European Union.
Already, media reports have suggested that the headquarters of the merged company may no longer be based in London, as originally planned.
“Of course, in the event of Britain leaving the EU, it must be ensured that European regulatory requirements are respected,” German finance minister Wolfgang Schaeuble said last week.
“The most important question is which businesses remain in Frankfurt and which in London,” he added.
The business daily Handelsblatt suggested that the joint headquarters could be based in Frankfurt alone, or even in a third, “neutral” city such as Amsterdam.
Separately on Monday, Handelsblatt reported that the two sides were considering moving their combined the euro clearing activities — the payment and settlement of transactions in euros — to Frankfurt in the wake of “Brexit”.
Currently, the euro clearing business is carried out by LSE’s LCH unit in London.
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