(Corrects to 29 billion euros in 8th paragraph)
Feb 26 London Stock Exchange said its
proposed merger with Deutsche Boerse AG was unlikely
to be approved by the European Commission, leaving the stock
market operators' third attempt at combining on the brink of
The LSE said in a statement late on Sunday that the
commission had asked it to sell its 60 percent stake in
fixed-income trading platform MTS to satisfy antitrust concerns
over the merger of Europe's two largest market operators.
Calling the request "disproportionate," the British exchange
said it believed that it would struggle to sell MTS and that
such a sale would be detrimental to its ongoing business.
"Based on the commission's current position, LSE believes
that the commission is unlikely to provide clearance for the
merger," it said.
The exchange added that it would still work to make the
merger with Deutsche Boerse succeed, but that would be
impossible unless the commission changed its position.
In a separate statement, Deutsche Boerse attributed the
decision to LSE alone. LSE "resolved tonight to not commit to
the required divestment of LSEG's majority stake in MTS,"
Deutsche Boerse said, adding that it expected a final decision
from the commission by the end of March.
The commission declined to comment.
The two exchanges announced plans to merge in a 29 billion
euro deal just over a year ago, aiming to create a giant trading
powerhouse that would better compete against U.S. rivals that
were starting to encroach on the pair's turf.
The exchanges had already agreed to sell part of LSE's
clearing business, LCH SA, in order to satisfy antitrust
LSE said the commission had also raised concerns this month
about the impact on the European market landscape of access to
bond and repo trading feeds were the two exchanges to merge. LSE
said it had offered certain proposals to address this but that
the commission had requested they sell all of MTS instead.
The commission had given the exchanges until Monday to come
up with a proposal to meet that demand.
MTS is a relatively small part of LSE's business, but it is
a major platform for trading European government bonds,
particularly in Italy, where it is classified as a "systemically
important regulated business."
LSE said that such a sale would need regulatory approval
from several governments in Europe, and it would be detrimental
to its wider Italian business.
"Taking all relevant factors into account, and acting in the
best interests of shareholders, the LSE Board today concluded
that it could not commit to the divestment of MTS," the exchange
(Reporting by Ismail Shakil in Bengaluru; Additional reporting
by Rachel Armstrong, Andreas Kroener and Foo Yun Chee; editing
by Jason Neely and Cynthia Osterman)