Merger expert questions union between LSE and Deutsche Boerse

Expert says proposed £450 million savings will not happen, as delays and uncertainty could lead to business declines.

An expert in corporate ‘mega mergers’ has questioned whether the London Stock Exchange (LSE) and Deutsche Boerse merger will be worth the trouble.

Professor of Practice at Warwick Business School in the UK, John Colley, explained that the regulatory, competition and political approval process could lead to significant delays and amendments.

He expects delays in the completion of the merger, explaining “the merger may well happen but the likely delays and integration uncertainty may mean that any benefits are offset by business decline.”

Duplicate activities in Frankfurt and London will be needed to appease regulatory and political authorities, meaning the planned savings of £450 million “will simply not happen,” Colley added.

However, Deutsche Boerse shareholders will likely benefit from the recent EU referendum result, as markets could leave London for Frankfurt.

The LSE could also benefit from the merger by maintaining a strong position within the EU markets, despite Brexit.

Colley concluded: “Both businesses will likely lack forward momentum and lose business.

“Many mergers have trodden this particular path before the LSE and Deutsche Boerse."