The companies themselves have said they remain “fully committed” to the £21bn deal, which shareholders are being asked to approve next month.
LSE shareholders are due to vote on the merger on 4 July.
But Exane BNP Paribas analyst Arnaud Giblat believes the chances of the deal going through are now “very low”.
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“We view Brexit as pretty much an insurmountable obstacle,” he said. “We see an increased likely intervention of German politicians in seeking to block the deal regardless of the compromises on HQ.” Under the current terms of the deal, the headquarters of the joint companies is set to be in London. Sources close to the deal have previously said this was non-negotiable.
The analyst also said that if the deal falls through, he would expect New York Stock Exchange owner Intercontinental Exchange (ICE) to make a takeover approach for LSE.
If the deal does go ahead, Giblat said he expects completion to be delayed “well into 2017”.
Jonathan Goslin, an analyst at Numis, told City A.M. the Leave vote makes the deal “even less likely” to go through, giving it less than half a chance.
“Brexit is going to seriously jeopardise the chances of the [shareholder] vote going through,” said Goslin. “How can you ask someone to vote on such a massive, transformational deal given the complete uncertainty in the market?”