Shareholder advisory groups back London Stock Exchange merger

William Turvill
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Inside The London Stock Exchange
The London Stock Exchange and Deutsche Boerse agreed a £21bn merger in March (Source: Getty)

The London Stock Exchange (LSE) has been given a boost ahead of the referendum with three shareholder advisory groups endorsing its £21bn merger with Deutsche Boerse.

Pensions & Investment Research Consultants (Pirc) has recommended that LSE shareholders approve the deal regardless of the result of the EU vote.

And two more influential groups from the US, Glass Lewis and Institutional Shareholder Services (ISS), are understood to have done so also.

Read more: Deutsche Boerse: London Stock Exchange merger is Europe's "last chance"

The stock exchanges have faced several questions in relation to the referendum since they announced the details of their merger in March. However, both companies have said the deal is not dependent on the UK remaining inside the EU.

If the UK votes for Brexit today, a referendum committee set up by the LSE and Deutsche Boerse will activate to decide how it affects the deal.

LSE shareholders are due to vote on the proposed merger on 4 July.

Read more: London Stock Exchange-Deutsche Boerse merger could lead to 1,250 job losses

Pirc’s shareholder guidance document said:

The rationale for the proposed acquisition has been clearly disclosed and adequately explained. Concerns arise as to the timing of this acquisition, given the uncertainty caused by the Brexit referendum. However, both companies have established a referendum committee to deal with this issue. Governance concerns do not arise as there is sufficient balance of independence on the Board to ensure that there was sufficient independent oversight of the proposal. Furthermore, post-completion, the new Company is to comply with UK corporate Governance Code requirements. Therefore, shareholders are recommended to approve.

Meanwhile, Pierre Pringuet, president of French business lobby AFEP, has called for the EU competition authorities to block the merger.

The French government has also previously expressed competition concerns over the tie-up.

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