>>> What to look at today - 28th of June 2016

Dow -1.50% S&P -1.81% Nasdaq -2.41% Russell -3.36%
US Market closed lower, pushed by brexit implications on global economy. S&P 500 (-1.8%) gapped down at the beginning of the session, slipping alongside weakness in heavily-weighted financials (-2.8%), technology (-2.3%), and industrials (-2.43). Eight sectors ended in negative territory with commodity-sensitive materials (-3.4%) trailing financials (-2.8%), energy (-2.5%), and technology (-2.3%). Conversely, countercyclical utilities (+1.3%) and telecom services (+0.6%) ended in the green. Energy was also pressured by crude (-2.4% @ $46.48).Volume were above average with 1.2b shares. US After Hours RLOC +165% on acquisition news... RGLS -53.5% on clinical hold notice and BUFF -8% following secondary offering news, SCTY -0.8% on news of formation of special committe to evaluate Tesla proposal. Asian markets are trading mixed and S&P500 futures are up about 1%. The initial shock of Brexit may be wearing off, even as Fitch followed S&P to cut UK sovereign rating after US market close. Officials in Japan reiterate they are prepared to curb JPY strength, while Korea govt unveiled a plan for a KRW20T fiscal stimulus package. In FX majors, USD/JPY tracked lower to 101.60 in the early hours, but then bounced to 102.20 high. GBP/USD spiked up about 100pips above 1.3320. Gold prices were down over $10 below $1,318 in electronic trade. Fitch cut UK sovereign rating to AA from AA+ with a negative outlook. China Academy of Social Sciences forecast Q2 GDP at 6.7% and CPI at 2%, with 2016 GDP seen at 6.6% - down from 6.9% last year - and PPI declines slowing.

Nikkei +0.61% Hang Seng -0.78% CSI -0.13% Shanghai +0.01%

Eur$1.1060 CNH 6.6784 CNY 6.6489 JPY 101.97 GBP 1.33 CHF 0.9772 RUB$ 65.0169 WTI$ 47.14 (+1.75%)

S&P +0.86% EuroStoxx +1.97% Dax +1.72% SMI +1.40% FTSE +1%

Macro :
- United Kingdom Cut to AA From AAA by S&P, Outlook Negative
- United Kingdom Cut to AA From AA+ by Fitch; Outlook Negative

Keep an eye on :
- AIR FP : Airbus, Safran to Set Up Company for Space Launchers: Les Echos
- BAYN GY : EC Commissioner Has Concerns About Bayer Monsanto Deal: Funke
- CSGN VX : QIA Said to Weigh Pulling Credit Suisse London Office Sale
- DBK GY : Soros Fund Makes ~EU100m Bet Against Deutsche Bank Shares
- EDF FP : French Regulator to Propose EDF Tariffs Drop of About 0.5%: AFP
- KPN NA : KPN CEO Buys 20,000 Co. Shares for EU2.90 Apiece: AFM Filing
- MC FP : Nude Brands acquired by Beautycounter from LVMH
- NESN VX : NestlÉ to Name Ulf Mark Schneider as CEO, Bulcke to Step Down
- ROG VX : Roche Says Ocrevus Applications for MS Accepted in U.S., Europe
- RBS LN : U.K. Govt Said to Put Sale of RBS, Lloyds Stakes on Hold: Rtrs:
- SAN SM : Santander Reiterates Financial Targets for 2016
- SAZ GY : Activist Investor Wyser-Pratte Takes Stake Below 3% in Stada: HB
- FP FP : Total Said to Win 30% Stake in Qatar’s Al-Shaheen Oilfield: Rtrs
- UBSG VX : French Prosecutor Wants UBS to Stand Trial for Tax Evasion: AFP
- VOW3 GY : VW’s U.S. Tab Said to Grow to $15 Billion in Emissions Scandal

>>> Europe : Brokers Upgrades & Downgrades - 28th of June 2016

>>> Up
*AB FOODS RAISED TO BUY VS HOLD AT BERENBERG
*ACERINOX RAISED TO BUY VS SELL VS GOLDMAN
*ARCELORMITTAL REMOVED FROM GOLDMAN CONVICTION LIST; STAYS BUY
*BAT RAISED TO BUY VS SELL AT GOLDMAN, ADDED TO CONVICTION LIST
*BT GROUP RAISED TO NEUTRAL VS UNDERPERFORM AT MACQUARIE
*COM HEM RAISED TO OUTPERFORM VS NEUTRAL AT CREDIT SUISSE
*DIAGEO RAISED TO NEUTRAL VS SELL AT GOLDMAN
*DNB ASA RAISED TO SECTOR PERFORM AT RBC CAPITAL
*ENLINK MIDSTREAM LLC RAISED TO ’NEUTRAL’ AT ROBERT BAIRD
*FCA CUT TO NEUTRAL VS OUTPERFORM AT MEDIOBANCA
*G4S RAISED TO OUTPERFORM VS NEUTRAL AT CREDIT SUISSE
*INCHCAPE RAISED TO BUY AT CITI
*LEGRAND RAISED TO ’OVERWEIGHT’ AT BARCLAYS
*OUTOKUMPU RAISED TO NEUTRAL VS SELL AT GOLDMAN
*RIO TINTO RAISED TO OVERWEIGHT VS EQUALWEIGHT AT MORGAN STANLEY
*RWE RAISED TO BUY VS HOLD AT SOCIETE GENERALE
*SWEDBANK RAISED TO OUTPERFORM VS SECTOR PERFORM AT RBC
*SWISS RE RAISED TO MARKET PERFORM VS UNDERPERFORM AT KBW
*VALORA RAISED TO BUY AT BAADER-HELVEA
*ZURICH INSURANCE RAISED TO OUTPERFORM VS MARKET PERFORM AT KBW

>>> Down
*AEGON CUT TO NEUTRAL AT JPMORGAN
*BABCOCK CUT TO NEUTRAL VS OUTPERFORM AT CREDIT SUISSE
*BOOHOO CUT TO NEUTRAL AT CITI
*CAPITA CUT TO NEUTRAL VS OUTPERFORM AT CREDIT SUISSE
*CNP CUT TO UNDERPERFORM VS MARKET PERFORM AT KBW
*CREDIT SUISSE CUT TO SECTOR PERFORM AT RBC CAPITAL
*CYBG PLC CUT TO UNDERPERFORM AT RBC CAPITAL
*DEBENHAMS CUT TO NEUTRAL AT CITI
*EASYJET CUT TO HOLD FROM BUY AT LIBERUM; PT 1050P
*GENERALI CUT TO UNDERPERFORM VS MARKET PERFORM AT KBW
*GFK CUT TO HOLD AT HSBC
*HALFORDS CUT TO SELL AT CITI
*IAG CUT TO HOLD VS BUY AT LIBERUM
*IPSOS CUT TO HOLD AT HSBC
*KINGFISHER CUT TO SELL AT CITI
*KLOECKNER CUT TO SELL VS BUY AT GOLDMAN
*NEXT CUT TO NEUTRAL AT CITI
*POUNDLAND CUT TO NEUTRAL AT CITI
*REXEL CUT TO ’EQUALWEIGHT’ AT BARCLAYS
*SALZGITTER CUT TO SELL VS BUY AT GOLDMAN
*SCHNEIDER ELECTRIC CUT TO UNDERWEIGHT AT BARCLAYS
*UBS CUT TO UNDERPERFORM AT RBC CAPITAL

>>> PT Change


>>> Initiation
*ASR NEDERLAND NV RATED NEW UNDERWEIGHT AT JPMORGAN
*BALDER RATED NEW HOLD AT DNB, PT SEK220
*HANNOVER RUECK RATED NEW UNDERPERFORM AT MACQUARIE
*KORIAN RATED NEW HOLD AT BERENBERG, PT EU29
*MUNICH RE RATED NEW NEUTRAL AT MACQUARIE
*SCOR SE RATED NEW OUTPERFORM AT MACQUARIE
*SWISS RE RATED NEW OUTPERFORM AT MACQUARIE
*SIXT RATED NEW BUY AT BERENBERG, PT EU59.5
*UBI REINSTATED AT HOLD AT FIDENTIIS; VALUATION RANGE EU3.80/EU4
*WALLENSTAM RATED NEW HOLD AT DNB, PT SEK70

>>> Call
>> Stock
*ARCELORMITTAL REMOVED FROM GOLDMAN CONVICTION LIST; STAYS BUY
*EASYJET REMOVED FROM CONVICTION LIST AT GOLDMAN; STAYS BUY
*LLOYDS, DEUTSCHE BANK EXIT ANALYST FOCUS LIST AT JPMORGAN

>>> Asian Update

Asian Mid-session Market Update: Equities, risk FX stage a snapback rally as Brexit concerns subsid

***Economic Data***
- (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 116.8 v 118.8 prior
- (KR) South Korea May Consumer Confidence: 99 v 99 prior

***Index Snapshot (as of 04:00 GMT)***
- Nikkei225 +0.7%, S&P/ASX -0.7%, Kospi +0.4%, Shanghai Composite flat, Hang Seng -0.9%, Sep S&P500 +0.8% at 2,002

***Commodities/Fixed Income***
- Aug gold -0.3% at $1,321/oz, Aug crude oil +1.3% at $46.93/brl, Jul copper +1.5% at $2.15/lb
- GLD: SPDR Gold Trust ETF daily holdings rise 13.1 tonnes to 947.4 tonnes; highest since July 2013
- SLV: iShares Silver Trust ETF daily holdings rise to 10,350 tonnes from 10,333 tonnes prior
- (AU) Australia MoF (AOFM) sells A$150M in 1.25% 2022 Indexed bonds; avg yields 0.3569%; bid-to-cover 1.73x
- JGB: Japan's MoF sells ¥2.09T in 0.1% (0.1% prior) 2-yr JGBs; avg yield -0.295% (record low) v -0.237% prior; bid-to-cover 4.96x v 5.52x prior
- (CN) PBOC SETS YUAN MID POINT AT 6.6528 V 6.6375 PRIOR (lowest setting since Dec 2010, 2nd consecutive multi-year low)
- (CN) PBOC to inject CNY180B in 7-day reverse repos

***Market Focal Points/FX***
- US indices fell sharply for the 2nd straight day, but Asian markets are trading mixed and S&P500 futures are up about 1%. The initial shock of Brexit may be wearing off, even as Fitch followed S&P to cut UK sovereign rating after US market close. Officials in Japan reiterate they are prepared to curb JPY strength, while Korea govt unveiled a plan for a KRW20T fiscal stimulus package. In FX majors, USD/JPY tracked lower to 101.60 in the early hours, but then bounced to 102.20 high. AUD/USD and NZD/USD were both up about 0.8% to 0.74 and 0.7055 session highs, while GBP/USD spiked up about 100pips above 1.3320. Gold prices were down over $10 below $1,318 in electronic trade.

- Fitch cut UK sovereign rating to AA from AA+ with a negative outlook just after US market close, also providing more concreate assumptions behind Brexit spillover. Fitch estimated 2016 real GDP falling to 1.6% v 1.9% prior forecast and 2017-18 GDP at 0.9 v 2.0% prior forecast for both years. General government deficit was seen at an average of 3.6% of GDP over the next three years, compared with 2.8% in our prior 'Remain' base case. The Fitch cut follows S&P cut to AA earlier and a Moody's revision in Outlook to Negative overnight.

- Japan govt spokesperson Suga reiterated pledge to take firm action on markets as needed, while Fin Min Aso again noted market stability is important. Japan officials also remarked that financial markets have regained calm, though they continue to monitor conditions for signs of strain. on FX, Aso noted rates are more stable than feared from post-Brexit "worst case scenario". PM Abe also spoke again, noting uncertain outlook against some evidence of calm. Earlier, LDP party General Council, Toshihiro Nikai called for a fiscal stimulus as high as ¥20T, with ¥15T of govt funds be compiled into second extra budget and ¥5T to be used for govt investment and loans.

- China Academy of Social Sciences forecast Q2 GDP at 6.7% and CPI at 2%, with 2016 GDP seen at 6.6% - down from 6.9% last year - and PPI declines slowing. PBoC set Yuan sharply lower for the 2nd straight day, tracking firmer greenback against other major currencies. Premier Li urged close cooperation in dealing with Brexit spillover risks, adding that some short term volatility in China capital markets could be expected. Moody's warned on margin pressures for China property developers, noting "growth in nationwide home sales has peaked and will moderate to a single-digit percentage for the twelve months ending May 2017."

- South Korea govt has lowered its 2016 GDP target to 2.8% from 3.1% prior as anticipated and also lowered CPI to 1.1% from 1.5% prior. Korea's Presidential office also announced plans for fiscal stimulus estimated at over KRW20T, which includes KRW10T extra budget. Fin Min Yoo remarked that more specific plans for extra budget would be submitted shortly.

***Equities***
US equities / ADRs:
- RGLS: Announces clinical hold of RG-101; reports second serious adverse event of jaundice; -53.9% afterhours
- GE: To sell bulk of U.S. restaurant finance assets in separate transactions to three buyers for $1.4B in ending net investment; STL, WTFC and FHN to acquire the assets
- ANTM: Said to be prepared to walk away from the $48B Cigna deal - NY Post
- YUM: Yum China stake sale said to be delayed on missed bid deadline; Temasek, Primavera bidders said to hold off bids due to new conditions - financial press
- VOW3.DE: US settlement related to emissions scandal now estimated around $15B, up from $10B anticipated last week - financial press

Notable movers by sector:
- Consumer discretionary: Shimamura 8227.JP +8.3% (Q1 result); Murray Goulburn MGC.AU -6.8% (guidance)
- Financials: Greentown China 3900.HK -1.7% (Greentown Service share offer)
- Industrials: China Airlines 2610.TW -4.8% (may face another strike); Xinyi Glass Holding Co 868.HK -3.8% (update on spinoff)
- Technology: ynix Semiconductor 000660.KR -1.9% (expects to record Q2 op profit decline)
- Materials: Evolution Mining EVN.AU -0.4% (FY16 prelim result)
- Telecom: ZTE Corp 763.HK -1.3% (update on US export restrictions)

Le Temps : Nestlé a trouvé son nouveau patron dans le secteur médical

Nestlé a trouvé son nouveau patron dans le secteur médical

La nomination de Ulf Mark Schneider pour succéder à Paul Bulcke est une surprise à double titre. Elle marque un tournant dans l'histoire du groupe


Tout le monde a été doublement pris de court. Dans un communiqué envoyé lundi après la fermeture de la bourse, Nestlé a annoncé le nom de son nouveau directeur général. Il s’agit d’Ulf Mark Schneider, actuel patron de la société allemande Fresenius. Paul Bulcke, actuel numéro un du géant mondial de l’alimentation, prendra la place de Peter Brabeck-Letmathe à la présidence du conseil d’administration. Ce dernier, «ayant servi Nestlé pendant 50 ans […], aura atteint l’âge limite de départ à la retraite», souligne le communiqué de presse.

Nestlé a d’abord surpris car cette annonce était certes attendue, mais pas si vite. Si la nomination d’un nouveau numéro un était prévue en 2016, la plupart des observateurs pensaient que la nouvelle tomberait dans la deuxième partie de l’année. «Historiquement, Nestlé a plutôt annoncé le nom de son nouveau directeur général à l’automne, lors de la présentation des résultats après neuf mois», explique l’analyste de la banque Vontobel Jean-Philippe Bertschy.

Du côté de Vevey pourtant, rien d’étonnant: «C’est très simple, notre président a estimé que c’était le bon moment et que cela s’inscrivait bien dans le cadre des festivités de nos 150 ans», résume une porte-parole.

Une première depuis 1922

Mais Nestlé a surtout surpris car le nom d’Ulf Mark Schneider n’avait encore jamais été articulé. Et que cet Allemand de 50 ans, diplômé de l’Université de St-Gall et de Harvard, ne faisait pas partie de l’entreprise. Jusqu’ici, les yeux étaient plutôt tournés vers Wan Ling Martello – actuelle directrice du marché asiatique – ou Laurent Freixe – numéro un du marché Amériques. Ce d’autant que, depuis 1922, Nestlé a toujours recruté ses numéros un à l’interne.

Qu’importe la tradition, le conseil d’administration du géant alimentaire vaudois a choisi à l’unanimité de confier ses clés au patron d’un spécialiste des techniques médicales et des services pharmaceutiques; Fresenius est notamment reconnue pour son expertise dans le traitement de l’insuffisance rénale chronique par dialyse.

Le groupe, basé à Bad Homburg, au nord de Francfort, a réalisé 28 milliards d’euros de chiffre d’affaires l’an dernier. Ses 220’000 employés doivent beaucoup à Ulf Mark Schneider, si l’on en croit le communiqué qu’a publié Fresenius lundi soir. En treize ans, il a multiplié ses ventes par quatre et ses profits nets par douze.

Un «moment-clé» dans l’histoire de Nestlé

Au-delà des surprises, ce choix marque un moment-clé dans l’histoire du fabricant des Kitkat, selon l’analyste de Vontobel. «Ulf Mark Schneider ne vient pas de Danone ou de Coca-Cola, mais d’un groupe actif dans le domaine de la santé. Cette fois, c’est vraiment le grand virage de Nestlé vers le bien-être et la nutrition», relève Jean-Philippe Bertschy. Avec cette nomination, «le conseil a renforcé les capacités de l’entreprise à accélérer l’ambition de Nestlé de devenir un acteur mondial de premier plan en nutrition, santé et bien-être», a commenté Peter Brabeck, cité dans le communiqué.

Aux yeux de Jean-Philippe Bertschy, le nouveau patron devra faire des choix tranchants. «S’il n’accélère pas les désinvestissements dans les chocolats et les produits surgelés, il y aura un gros problème de compréhension de la part de la communauté financière», estime-t-il. Et de s’interroger sur la vision d’avenir du futur patron. «Préférera-t-il un groupe qui réalise 110 milliards de francs de ventes avec quelques produits qui ne sont pas bons pour la santé? Ou plutôt un groupe qui réalise 80 milliards de francs de vente, mais avec un accent sur les produits nutritionnels?» Réponse dès le 1er janvier 2017.

WSJ : Lyft Hires M&A Banker Qatalyst Partners


Lyft Hires M&A Banker Qatalyst Partners
Hiring comes as highly valued startups find it tougher to raise funds from venture capitalists


Ride-hailing startup Lyft Inc. hired Qatalyst Partners LP, the boutique investment bank best known for helping tech companies find a buyer, according to people familiar with the matter.

Frank Quattrone, the founder and executive chairman of Qatalyst, has contacted companies including large auto makers about acquiring a stake in Lyft, the people said. It isn’t clear whether Lyft is aiming to sell itself or raise new funding.

Lyft, the largest U.S. rival to Uber Technologies Inc., has tried to keep up with its larger competitor as both companies burn through capital to expand their ride-hailing services. The two San Francisco companies pour millions of dollars into subsidizing low-price rides and giving cash bonuses to new drivers, and both Uber and Lyft have said such spending has put them on a path to profitability.

Lyft has raised about $2 billion in funding, or less than one-sixth the total funds raised by Uber. Lyft was last valued at $5.5 billion by investors including auto maker General Motors Co.

Hiring Qatalyst, one of the most active Silicon Valley deal makers, may signal Lyft is open to a sale. Qatalyst ranks fourth this year among banks advising on U.S. acquisitions, working on deals totaling $33.7 billion, according to data provider Dealogic. Those deals include a coveted role advising LinkedIn Corp. on its $26 billion sale to Microsoft Corp. , announced two weeks ago.

One potential buyer may be General Motors, which paid $500 million for a 10% stake in Lyft earlier this year and indicated that the ride-hailing service could be crucial to the future of automobiles. The two companies have since agreed to develop self-driving cars and to offer deals on rental cars to Lyft drivers.

Technology M&A may be due for an uptick this year, as highly valued startups find it more difficult to raise funds from venture capitalists. Marc Andreessen, whose firm Andreessen Horowitz is an investor in Lyft, said at the Bloomberg Technology Conference earlier this month that more firms are considering or negotiating a merger than any time in the past four years.

So far this year, there have been at least $260 billion of tech deals announced globally, according to Dealogic data. That is the second-fastest pace ever for the period, after 2000. Technology is the busiest sector for M&A this year, as it was in 2015, the data show.

The growing popularity of ride-hailing has attracted several of the biggest auto makers and tech companies. In May alone, Apple Inc. said it invested $1 billion in Chinese startup Didi Chuxing; Volkswagen AG bet $300 million on Israeli company Gett; and Toyota Motor Corp. made an investment in Uber. Alphabet Inc., a leader in self-driving cars, is testing its own carpooling service with its employees in San Francisco.

Lyft has in recent months joined with Didi Chuxing and two other Asian ride-hailing services in an effort to help each other compete with Uber in their respective countries. Both companies share a common investor in Chinese internet company Alibaba Group Holding Ltd.

Mr. Quattrone, one of the prominent IPO bankers during the dot-com boom, started San Francisco-based Qatalyst in 2008. In January, Mr. Quattrone stepped down from his role as chief executive, handing that title to his longtime partner, George Boutros.

>>> US After Hours Summary: RLOC +165% on acquisition news... RGLS -5

After Hours Summary: RLOC +165% on acquisition news... RGLS -53.5% on clinical hold notice and BUFF -8% following secondary offering news

After Hours Gainers:

M&A related: RLOC +163.5% (ReachLocal to be acquired by Gannett for $4.60/share), CRL +5.0% (light volume, acquires Blue Stream Laboratories; terms not disclosed), MEET +1.9% (MeetMe to acquire Skout for $28.5 mln in cash & 5.37 mln common shares, implying an enterprise value of ~$54.6 mln, expects earnings accretion in first 12 months post-closing),

Companies trading higher in after hours in reaction to news:  MRNS +16.9% (Marinus Pharmaceuticals will host call on Tuesday June 28 at 9am ET to report results from Phase 2 investigator-sponsored, exploratory study evaluating ganaxolone in children with Fragile X Syndrome), HL +2.8% (S&P revises Hecla Mining outlook to positive on better-than-expected performance; Ratings Affirmed),  ZYNE +1.1% (announces 'positive' top line results from a Phase 1 trial of ZYN002 cannabidiol gel in development for the treatment of epilepsy, osteoarthritis and Fragile X Syndrome), AHP +0.4% (Ashford Hospitality Prime sends letter to Weisman inviting them to raise their offer & engage in due dilligence on a non-exclusive basis, notes the previously-announced offer 'materially' undervalues the co), XRX +0.2% (light volume, Xerox announces agreement with Carl Icahn, will appoint Jonathan Christodoro to the Board effective immediately)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: EBF -2.0% (ticking lower)

Companies trading lower in after hours in reaction to news: RGLS -53.5% (receives verbal notice from the FDA that its IND for RG-101 for the treatment of chronic hepatitis C virus infection has been placed on clinical hold), BUFF -8% (Blue Buffalo commences secondary offering of 15 mln shares of its common stock on behalf of selling shareholders), SAND -4.6% (announces $50 mln bought deal financing at $4.45/share), SCTY -0.8% (SolarCity announces formation of special committee to evaluate Tesla proposal)

>>> LSE/Deutsche Boerse HoldCo HQ location looms as stumbling block

LSE/Deutsche Boerse HoldCo HQ location looms as stumbling block
* HQ move to Frankfurt would 'kill' deal in current form - source
* UK less likely post-Brexit to accept Frankfurt HQ - banker
* Brexit deemed worsening factor on existing Hessen deal concerns

London Stock Exchange’s (LSE) [LON:LSE] and Deutsche Boerse’s [ETR:DB1] planned merger could face regulatory opposition over the London location of the combined company’s planned headquarters, a source close to the situation and a sector banker said.

Any move to shift the HQ to Frankfurt would “kill the deal” in its current form, the source said.

German regulators and politicians had voiced concerns over the planned “HoldCo” HQ location in London rather than Frankfurt already before last week’s UK vote to leave the European Union (EU), the sector banker said, adding that Brexit may turn this into an even bigger stumbling block. Meanwhile, UK policy makers are now less likely to accept a HQ location in Frankfurt as they will want to retain clearing and exchange infrastructure in the UK, he argued.

This impasse could potentially be resolved if UK companies were granted passporting rights to run operations in the EU, the banker said. But this would require lengthy negotiations over “a whole host of specific areas”, he argued.

It would have been easier to finalize the merger without Brexit, the source said. But even before last week’s referendum outcome, the Hessian Exchange Supervisory Authority, which needs to clear the deal, had signalled that it would need to scrutinize several aspects of the transaction, he added.

The deal parties need to engage in a long-term dialogue with Hessen to understand the regulator’s concerns and whether these primarily relate to jobs, Frankfurt’s position as a financial hub, or other matters, the source said. However, any relocation of the HQ to Frankfurt would mean the parties would need to “start again”, the source said. This could be possible if LSE or Deutsche Boerse shareholders vote down or do not tender into the deal, but would then result in a different combined company, he added.

LSE and Deutsche Boerse’s shareholders would likely have to vote on a HQ relocation from London to Frankfurt, a person familiar with the German company said. It would not be an option to adjust the deal terms or to change the deal structure from a merger to a takeover, this person said.

For now, the parties need to focus on LSE’s shareholder vote on the merger on 4 July and Deutsche Boerse shareholders’ tender process, which ends on 12 July, the source said. Regulators including Hessen will be in focus after that, he added.

A person familiar with LSE declined to comment on specific shareholder feedback ahead of the vote, but noted there have been no signs that would give cause for concern. Market participants have been positive about the deal rationale so far. And with the UK outside the EU, the logic for a company with one foot in both regions would be even stronger, he argued.

LSE shareholders will be in dialogue with the deal parties up until the 4 July meeting, the person familiar with the UK company said.

As of 22 June, Deutsche Boerse shareholders representing 0.66% of the votes had approved the merger, the person familiar with that company noted. Large investors are likely to make up their minds right before the 12 July deadline, this person added without speculating about the outcome.

But LSE and Deutsche Boerse’s share prices indicate that the deal may not happen, the sector banker said. As of today (27 June) LSE stock is down 16% and Deutsche Boerse 14% since 23 June, before the UK referendum outcome was announced. This may be due to likely regulatory hurdles, the first and a second sector banker said. This, rather than any shareholder opposition, is the most plausible reason for the price reaction, the first banker added

The parties on 24 June said they remained committed to the deal and would continue the process of obtaining necessary approvals.

Their Referendum Committee will in coming days convene and discuss the priorities, the person familiar with Deutsche Boerse said, adding that preparations are currently being made for the meeting. Ways to alleviate any concerns at the Hessen regulator will likely be part of the discussion. But because so much uncertainty remains over the form of Brexit, it is largely impossible to say much about the agenda, this person added. The Committee will assess the situation continuously, but at this early stage it “does not have much to talk about”, the source argued.

It will not be possible to extend the deal timeline beyond the 13 June 2017 long-stop date, the source and person familiar with Deutsche Boerse noted. The deal should be possible to close before that date, the person argued. In any case, Brexit per se is unlikely to hit the deal or the timeline, the source argued, adding that regulation will probably determine the outcome.

Spokespersons for LSE and Deutsche Boerse declined to comment on the matter.