The mega-merger between the owner of the London Stock Exchange and Germany’s Deutsche Boerse has been thrown into doubt with European regulators expected to block it.
London Stock Exchange Group said it would struggle to meet the commission’s requirement that it must sell its 60% stake in fixed income trading platform MTS in order to for the deal to be cleared.
Plans for a €29bn (£25bn) “merger of equals” were agreed a year ago with the aim of creating a trading powerhouse to stand up against US rivals.
But now it looks likely that the tie-up will fail on the third attempt after previous abortive merger plans in 2000 and 2004.
LSE said in a statement that the commission had asked it to sell its stake in MTS – a leading platform for European government bonds – in order to satisfy competition concerns about the merger.
The group said it regarded the request as “disproportionate”.
It said that while MTS was not a major contributor to its revenues, it was a “systematically important” business in Italy.
Extricating itself from the business would require regulatory approval from several countries and would be detrimental to its wider Italian business.
LSE said it was “highly unlikely that a sale of MTS could be satisfactorily achieved” and that it could not commit to it.
It added: “Based on the commission’s current position, LSEG believes that the Commission is unlikely to provide clearance for the merger”.
However the group said it would still take steps to try to implement the deal.
In a separate statement, Deutsche Boerse attributed the decision to LSE alone.
LSE “resolved tonight to not commit to the required divestment of LSEG’s majority stake in MTS,” Deutsche Boerse said, adding that it expected a final decision from the commission by the end of March.
The LSE is one of the world’s oldest stock exchanges and can trace its history back more than 300 years.
The wider LSE Group was formed in October 2007 when the London Stock Exchange merged with Milan stock exchange Borsa Italiana.
It has since completed further deals including the £1.6bn takeover of US stock index Frank Russell.