The rationale for the merger has undoubtedly changed and perhaps the boards of LSE and Deutsche Börse would do well to reconsider the rationale for the deal. Shareholders vote shortly on the merger and it must be anything but clear what they are voting for.
"As for the staff of both exchanges their future positions remain uncertain. During bid and integration periods research identifies that staff uncertainty results in substantial reductions in efficiency.
This almost invariably results in lost market share and many of the better staff leaving. In short, during protracted bid and integration periods the business deteriorates rapidly.
A difficult decision awaits the respective boards. Do they get on with it and risk political reversal and associated damage or do they call off the deal until the smoke clears? The latter course may bring renewed US interest for the LSE as it would be 'in play'.
Perhaps the directors of both the LSE and Deutsche Börse are in too much of a hurry to press on with the 'merger of equals' before the smoke clears over Brexit. The consequences of Brexit are anything but clear as yet. UK political leadership is in turmoil. Threats are being issued by politicians Europe wide and businesses in the City and elsewhere that jobs will move to the EU.
The LSE/Deutsche Börse merger was always going to have to achieve political and competition authority assent before proceeding. The German authorities would never allow control to pass to London, while similarly the UK would not allow the reverse.
The compromise was a London head office and a Deutsche Börse CEO. Hence the billing of a 'merger of equals' and virtually no information provided as to where the initial batch of 1250 redundancies would fall. Frankfurt must now see its chance of becoming the dominant financial centre in Europe as trading is switched from London. While the EU will want to see the trading housed within its own boundaries with Paris and Frankfurt scrapping it out.
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