LSE/Deutsche Boerse's regulatory problems may be due to French political pressure - report
The European Commission’s (EC) late request for the London Stock Exchange Group [LON:LSE] to sell its majority holding in the Italian exchange business MTS as a condition of approval for the LSE’s proposed merger with Deutsche Boerse [ETR:DB1] may have been due to political pressure from France, The Times reported.
The newspaper cited a source close to the LSE who said “the French” may have wanted, in addition to the acquisition of LSE’s French clearing business LCH SA by Euronext, control over all European platforms and trading.
The LSE said on 26 February that the EC had requested the MTS disposal, a request that Deutsche Boerse and the LSE were not expecting, according to the report.
Deutsche Boerse and the LSE had agreed to sell LCH SA to Euronext [EPA:ENX] for EUR 510m (GBP 434m) as a concession to the EC, as previously reported.
The LSE has indicated that it cannot agree to sell its shareholding in MTS as it considers the measure to be disproportionate and might put its relationship with Italian regulators at risk, The Times report said.
There remains a slim chance of the proposed merger proceeding, although that is unlikely because the EC has already dismissed the LSE’s proposal of another remedy other than selling its MTS stake, the item said.
A report from this news service yesterday cited a person familiar with the situation who said the EC's statement of objections indicated that the regulator wanted to ensure that repo trading feeds provided by MTS would still go through LCH SA after the proposed merger.
The EC wanted MTS sold specifically to Euronext, a second person familiar added.
A Financial Times report mentioned talk that the US-based exchange operators CME Group [NASDAQ:CME] and InterContinental Exchange [NYSE:ICE] might make offers for either Deutsche Boerse or LSE, in light of the likelihood of their proposed merger being blocked by the EC.
A separate report in The Times, however, said suggestions of an offer from ICE for the LSE were considered unrealistic due to the UK government’s apparently protectionist stance.
The Daily Telegraph quoted one banker working on the deal who said he considered an offer from ICE or CME to be unlikely.
Link to original source (The Times)