Deutsche Boerse Investors Poised to Back LSE Deal by End of Week

  • Shareholder approval rises to 53% -- near 60% minimum needed
  • Deal said likely to reach key investor approval level

Deutsche Boerse AG’s takeover of London Stock Exchange Group Plc is edging closer to shareholder approval, with the German exchange saying yesterday that 53 percent of shareholders have approved deal so far.

That’s close to the 60 percent minimum required, and clears another hurdle as the companies navigate the still-looming threat of government opposition. Deutsche Boerse could reach that needed level as soon as this week, according to a person familiar with the matter, who asked not to be named citing confidentiality.

LSE shareholders last week approved the deal in a near-unanimous vote.

Reaching the 50 percent level is a key threshold for Deutsche Boerse because it allows some passive index funds to begin tendering their shares. Such funds account for as much as 15 percent of the company’s stock and could help them reach the needed approval level.

Should Deutsche Boerse secure shareholders’ blessing, the exchange operators still have other problems to surmount, including political fallout from the U.K. decision last month to leave the European Union. 

German authorities have shown unease at the prospect of their prized market’s holding company headquarters being in London, outside the EU. French and German leaders, meanwhile, are jockeying to take euro-denominated clearing -- a staple of one LSE unit -- away from London.

The companies have also faced criticisms from Belgium and Portugal, where rival Euronext NV operates markets. Officials in those countries claim the merger would damage competition. Antitrust concerns have killed previous industry merger attempts.

While Brexit actually bolsters the case for a European exchange linking Frankfurt and London, supervisors are likely to be critical of euro-denominated clearing being carried out in the City after the EU divorce, said a key figure in Germany’s central bank, which oversees Deutsche Boerse’s clearing unit.

Frankfurt “would be the more appropriate alternative,” said Andreas Dombret, a Bundesbank board member.

Deutsche Boerse on Monday reduced the threshold for approval and extended the deadline by two weeks to July 26. The company cited passive investors as a reason for the change.

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