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London and Frankfurt Stock Exchanges agree £21.2bn merger

The German and British stock exchanges have agreed a new £21.2 billion deal to merge in hopes of establishing a European Powerhouse to mobilise capital in Europe.

UK Germany Stock Exchange Merger

The German and British stock exchanges have agreed a new £21.2 billion deal to merge in hopes of establishing a European Powerhouse to mobilise capital in Europe.

The German stock exchange situated in Frankfurt - the Deutsche Boerse AG - and the London Stock Exchange Group Plc (LSE) seek to join forces in the merger. The aim is to create a new European Powerhouse that will open new opportunities for all European markets and stand strong against the U.S’s stock market.


Details of the deal, confirmed last Wednesday, will see Deutsche Boerse shareholders attributed 54.4% and LSE’s shareholders would be assigned the remaining 45.6% of the new company.


The merge will result in the creation of the world’s biggest exchange in terms of revenue – with £3.7 billion worth of stock, indices and market data, clearing, settlement, bond and derivate trading being exchanged between the two European nations.


The move would see capital in the continent move more freely, allowing investment in areas such as the UK property market occur more easily than before.


However, Intercontinental Exchange, owner of the New York Stock Exchange, also expressed an interest in bidding for the British group – potentially leading to a takeover war between New York and Frankfurt to merge with the London stock exchange.


If the deal does go ahead, the benefits of a pan-European exchange would enable Europe to enhance its capital markets, said Deutsche Boerse Chief Executive Carsten Kengeter – tying up with the European Union’s plans to establish a “Capital Markets Union”.


Created by the European Commission, the Capital Markets Union (CMU) is a program designed to mobilise capital in Europe. Its scope is to develop a more diversified financial system by ‘unlocking’ capital in Europe and channelling it to small and large enterprises and to infrastructure projects.


The merge between the Deutsche Boerse and the LSE syncs with CMU’s scope to link savings with growth - offering new investment opportunities for savers and giving businesses greater choice of funding at lower costs.

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