• Survey of traders shows little optimism of takeover happening
  • Rationale for merger has changed, says business professor

The odds of Deutsche Boerse AG successfully taking over London Stock Exchange Group Plc is just 26 percent after the U.K.’s vote to leave the European Union raised questions about the deal’s logic.

That’s according to the average estimate of 25 event-driven desks, equity analysts and fund managers surveyed by Bloomberg News. A common market calculation based on the two companies’ share prices put the probability of the deal closing at about 39 percent, down from about 70 percent on June 21.

Last week’s surprise Brexit vote has thrown markets into disarray, upended the country’s political landscape and spurred companies to reassess business plans. The result adds to the transaction’s other uncertainties, including mounting criticism in Germany about the proposal to locate the combined company’s headquarters in London. The referendum has altered the logic behind one of the biggest pending takeovers between European companies, says John Colley of Warwick Business School.

“The rationale for the merger has undoubtedly changed, and perhaps the boards of LSE and Deutsche Boerse would do well to reconsider,” said Colley, who runs the business masters program at the U.K. university. “Shareholders vote shortly on the merger and it must be anything but clear what they are voting for.”

German opposition to the deal has increased the risk of the plans collapsing, advisers working on the merger have said. Regulators in Germany and Brussels, as well as shareholders, could grow more hesitant to approve it after Brexit, they said.

Despite the concerns of regulators, the two companies are still unlikely to change the terms of the takeover, Louis Capital analyst Ben Kelly wrote in a report dated June 29.

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