City grandees are questioning the proposed merger between the London Stock Exchange Group and Deutsche Boerse, joining politicians in both the UK and Germany who have raised red flags over the deal.
Former UK trade minister and Standard Chartered chairman Lord Mervyn Davies told the Financial Times over the weekend that a government “public interest test” should be applied to the deal, while former SocGen exec Jean-Pierre Mustier asked if the merger would best serve the British economy, saying: "“The City needs an independent London Stock Exchange for the good of the United Kingdom."
LSE chief executive Xavier Rolet rejected the idea that the merged exchange would lose its independence, however, telling the Financial Times: "The shareholding point is something that actually we’re quite a bit puzzled by.
"Today there are more British shareholders in Deutsche Boerse than German shareholders."
The proposed deal initially received wide support in the City, but it has come under increased criticisms in recent days from investors and politicians alike in both the UK and Germany who claim the merger would undermine their respective interests.
MPs on the Treasury Select Committee said last week that they wanted to grill LSE bosses over the deal, while former Frankfurt mayor Wilhelm Speckhardt told German media a merger would be a “catastrophe” for his city.
Manfred Zass, a former Deutsche Boerse director, has also claimed the deal would give London an unfair advantage, telling a German magazine: "The supposed parity – the boss here, the domicile there – creates a recognisably lopsided Frankfurt."
"We should not be naïve," Zass added. "With respect, if you know the push and pull behind such a merger, it sounds more like an investment-banker fairy story."
Details of the "merger of equals" were announced earlier this month by the companies. If it goes through, LSE shareholders will own 45.6 per cent of the new company. Shareholders of the Frankfurt-based exchange Deutsche Boerse will get the remaining 54.4 per cent.
The merged company would be headquartered in London and led by Deutsche Boerse chief executive Carsten Kengeter. LSE chief executive Xavier Rolet would step into the role of adviser to ensure a smooth transition.