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Merger take-three: Freshfields and Linklaters advise as LSE and Deutsche Börse re-visit talks

Nearly 16 years since talks first began, the London Stock Exchange (LSE) and German rival Deutsche Börse are engaged in merger discussions again, and Magic Circle duo Freshfields Bruckhaus Deringer and Linklaters have won roles advising on the potential combination.

Both stock exchanges confirmed yesterday (23 February) they are in negotiations about an all-share merger with Freshfield partners Andrew Hutchings, Mark Rawlinson and London M&A co-head Piers Prichard Jones leading the firm’s team to represent LSE.

Linklaters corporate partner Roger Barron is acting for Deutsche Börse along with Simon Branigan in London; Ralph Wollburg and Staffan Illert in Germany. The Magic Circle firm had advised the stock exchange when it set up a clearing house in Singapore in 2015, as well as the acquisition of foreign exchange trading platform 360T Beteiligungs GmbH in July last year for €720m.

The London and Frankfurt exchanges said they were in ‘detailed discussions about a potential merger of equals’, which if it goes ahead, will create a European trading powerhouse under a new holding company that would give Deutsche Börse shareholders a 54.4% stake and LSE shareholders 45.6%.

However, both exchanges said in their respective statements that ‘there can be no certainty that any transaction will occur’.

The decision to combine comes after both stock exchanges first attempted to merge back in 2000, and tried to form a new company called iX but the deal collapsed, resulting in both listing their own stock separately instead. In December 2004, Deutsche Börse made a £1.3bn approach for the LSE but saw its offer rebuffed.

Under the terms of the potential merger however, LSE shareholders would receive 0.4421 new shares in exchange for each LSE share, and Deutsche Börse shareholders would receive one new share in exchange for each Deutsche Börse share. The combined group would have a unitary board composed of equal numbers of LSE and Deutsche Börse directors.

Discussions between the parties remain ongoing regarding the other terms and conditions of the potential merger.