French request E.U. intervention on exchange merger citing fears over dominance. Michel Sapin, the French finance minister, reacted to news of a proposed 20 million pound tie up between Deutsche Börse and the London Stock Exchange with claims the merger would stifle competition and pose major dangers to the European economy as a whole.
London, England, June 30, 2016 — Following the intervention recently in a large scale Telecom merger, Sapin called for similar action by the European commission to stop the deal saying it would make the new company “overwhelmingly dominant.” He added at a press conference “This is not just a danger for a France but for Europe also. I am extremely concerned this merger will have major effects on the economy of the whole financial zone.”
“It would obviously be detrimental for Europe if a major dominant entity arose that held total power over our markets. That’s what we believe would happen if this deal was allowed to proceed. We need the E.U. to act to avoid a situation where there is no competition,” he added.
The merger looks set to create a financial juggernaut, similar in size to the Intercontinental Exchange (ICE) in North America that would snuff out smaller competition on the continent like Euronext stock exchange Paris branch.
Deutsche Börse would be majority shareholders in the proposed deal owning 54.6 percent of the new entity. The two companies claim the tie up would give them the ability to dramatically reduce costs by around 360 million pounds.
“It’s all about savings for both companies” said Richard Sharpe, Co-Head of Global Mergers & Acquisitions at Acom Tokyo Securities. “Yes, the resulting entity would be a large corporation but competitors should expect nothing less. It’s dog eat dog out here, nothing is going to change that.”
If the E.U. prevent the deal from going through it will be the third time the two exchanges have tried, and failed, to merge. Fifteen years ago they had a preliminary agreement to combine, only for the deal to be foiled with an offer by the owner of the Stockholm exchange, OM Gruppen, which fell through also.
Deutsche Börse then put in a firm bid for only 1.4 billion pounds a few years later which was quickly rejected by LSE.
Acom Tokyo Securities Ltd