London, Frankfurt bourses warn Brexit is a risk to merger plan

The London and Frankfurt share markets warned Friday that Britain's June referendum on European Union membership posed a risk to their plans to forge a super bourse.

The two markets have proposed to base the new group in the British capital while maintaining headquarters in London and Frankfurt if their plans to create a new combined bourse go ahead, the two groups said in a joint statement setting details of the merger.

But they said: "The parties know that a decision by the United Kingdom electorate to leave the European Union would present a risk for the project."

With this in mind, the two markets established a special joint working group to consider the possible consequences for their planned tie-up if Britain voted on June 23 for a so-called Brexit.

Under the planned deal, which was announced on Tuesday, London Stock Exchange (LSE) chief Xavier Rolet would retire from the combined group after seven years at the helm of Europe's biggest share market.

This would pave the way for Carsten Kengeter, who heads up Deutsche Boerse, the operator of the Frankfurt Stock Exchange, to take over as head of the new merged group, which would be estimated to be worth about 28 billion dollars.

Both sides see the merger as generating "substantial cost synergies," in particular through eliminating functions that are doubled up at the two groups, including in the areas of technology and backup services.

The fusion would result in Deutsche Boerse holding a 54.4-per-cent stake in the new combined group, while the London market would have a 45.6-per-cent holding.

The merger plan has to be approved by the European Union's monopoly authorities and several national EU regulators.

Last update: Fri, 26/02/2016 - 20:23

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