London Stock Exchange shareholders agree German deal

Shareholders in the London Stock Exchange (LSE) have voted in favour of a planned merger with its German counterpart Deutsche Boerse.

The LSE chairman, Donald Brydon, thanked shareholders for their "strong support" after 98.9% backed the deal.

The two stock exchanges agreed a $27bn (£20bn) merger earlier this year, but the Brexit vote has raised questions about how it should be implemented.

The LSE said the deal would still deliver value to shareholders.

"Whether the UK is just European or a member of the EU, the merger will create a globally competitive, industry defining market infrastructure group at the service of European industry," the company said.

Headquarters

Earlier, Mr Brydon said he was confident of "satisfactory" regulatory approval for the tie-up.

Last week, Germany's regulator said the proposed headquarters for the newly-merged company might not be in London.

"Without doubt... it is hard to imagine that the most important exchange venue in the eurozone would be steered from a headquarters outside the EU," said Felix Hufeld, Bafin's president.

"There certainly has to be an adjustment here."

Bafin does not have a veto on the deal but it is thought that Deutsche Boerse is likely to take its concerns seriously.

'Compelling rationale'

Mr Brydon told an extraordinary meeting of shareholders in London on Monday that Britain would remain in the EU for at least another two years providing ample time to work out the "optimal structure" for the deal.

He denied the London Stock Exchange had received approaches from any company other than Deutsche Boerse.

In a joint statement released shortly after the UK's referendum the companies said the outcome did not affect "the compelling rationale of the merger".

In fact, the head of the Deutsche Boerse Joachim Faber said the decision made it "ever more important to maintain and foster ties between the UK and Europe".

'Political interference'

David Cumming, head of UK equities at Standard Life Investments, told the BBC: "I think there will potentially be political interference from German regulators and politicians but it is not entirely clear they will scupper the deal.

"They don't like the fact the headquarters are here in Britain, but unless there is a significant change the deal will go ahead."

The merger still needs to be approved by regulators and, according to the Reuters news agency, any major changes to it could need further shareholder approval.

German shareholders are due to vote on the merger on 12 July, and the companies hope to complete the deal in early 2017.