London Stock Exchange (LSE) and Deutsche Boerse, Europe’s two largest exchanges, have today agreed terms for a £21 billion (Dh108.71bn) “merger of equals”.
The combined businesses will have revenues of €4.7bn (Dh19.13bn) and earnings of €2.2bn.
Simon French, the chief economist at the stockbroker Panmure Gordon, told The National today: "A strategic tie-up enhances London's status.
“At a time when a large majority of the City of London are worried about the impact of a potential Brexit [the UK holds a referendum on EU membership on June 23], a move that integrates the City into the European fabric will provide a welcome counterbalance.”
Although described as a marriage of equals, LSE shareholders will own 45.6 per cent of the enlarged group, while Deutsche Boerse stockholders will hold 54.4 per cent, according to the terms of the deal.
However, the merger will need to be approved by competition regulators and could yet be disrupted by a hostile bid from the US-based Intercontinental Exchange, the owner of the New York Stock Exchange, which has indicated that it could come in with a higher offer for LSE.
“I 100 per cent support this merger,” Xavier Rolet, the chief executive of the LSE who will step down when the deal is complete, said today. “I firmly believe it is the right deal for our employees, our customers and our shareholders.
“I also think it is the right time to take this transformative step in our histories.”
If regulators approve the deal, the new company, which is yet to be named, will maintain headquarters in both London and Frankfurt, although it will have its primary listing in the UK, where it will also be domiciled.
Follow The National's Business section on Twitter