The clock is ticking on what could be the final bourse mega-merger for a very long time. Certainly, if Deutsche Boerse succeeds in its bid to combine forces with the London Stock Exchange, it will create a European behemoth to rival American giant CME group.
This outcome would leave the financial world with four enormous exchanges, including HKEx in the Far East and of course the Intercontinental Exchange, or ICE, across the pond. Antitrust rules would surely, thereafter, prevent further consolidation on any such scale.
The LSE and Deutsche have a dozen days left to submit their formal proposal, with London boss Xavier Rolet confident that his favourite bankers at Robey Warshaw – the exceptionally successful Mayfair-based boutique – will prove swift and nimble enough to help his team meet the deadline.
Recent progress has included totting up savings from synergies, with estimates ranging from a quarter to half a billion pounds. A chunky figure could convince shareholders to back the deal – and they will need convincing.
Waiting in the wings are ICE and CME. The former has until 29 March to put up or shut up, while the latter has yet to show its hand but must be sorely tempted to get involved. It seems unfeasible that both US firms will simply stand aside and allow for the creation of such a daunting rival.
So who will win out in the end, the Americans or the Germans – and which deal would be best for London?
Opinion in the City is divided, but right now it leans towards the devil we know, and more is known about the prospect of a merger with Deutsche Boerse. The new company would be based here in the capital, we are assured, and while Carsten Kengeter is to head the firm, the German (who lives in Wimbledon and sends his kids to British schools) is essentially a Londoner.
Should the Americans enter the fray, regulators on this side of the Atlantic will no doubt raise their eyebrows. They have every right to investigate the deal, but should they repeat history and block any bids, they will need a strong justification for doing so.
This paper has always trumpeted London’s status as a leading financial hub, but we believe in its success as resulting from an open and principled approach to free trade, not from protectionism or so-called industrial policy. Whatever politicians and commentators have to say on the matter, ultimately the fate of the LSE should lie in the hands of its shareholders.