UK Edition
LSE says merger with Deutsche Boerse 'compelling' as revenues rise
London Stock Exchange Group has defended its “compelling” merger with German peer Deutsche Boerse and reported rising revenues as it faced shareholders at its annual meeting.
The company, which operates London’s stock market and the Borsa Italiana, said revenue rose 8pc to £358.9m in the first quarter, beating average estimates of £350.1m.
LSE Group said that its plan to combine its business with Deutsche Boerse, the third such attempt since 2000, is expected to close in late 2016 or early next year, barring a rival offer from a competitor such as the American exchange operator ICE.
“For shareholders, the board firmly believes that this merger will offer the opportunity to participate in long-term growth with diversified and resilient revenue streams,” chairman Donald Brydon told investors at the firm’s AGM.
“In broader terms for Europe's economy, the combined group will create a leading venue for capital formulation and facilitating economic growth, strengthening London, Frankfurt and Milan.”
Chief executive Xavier Rolet, who plans to step down once the Deutsche Boerse deal is sealed, said the merger “presents a compelling opportunity to expand our business in an industry-defining combination, creating a global markets infrastructure group”.
The LSE was told by the Takeover Panel earlier in the week to clarify Mr Rolet’s previous comments on the deal, including in an interview with the Sunday Telegraph in which he described the potential gatecrasher ICE as “some 'slash and burn' type organisation” that could “come in and kill all of the stuff we've done over the last few years”.
The firm said that his comments were not based on any discussions with ICE about its strategy.
Meanwhile, revenues at LSE’s capital markets division, which makes money from fees paid by companies listing on its markets and trading of stocks and bonds, is up by 8pc to £92.4m.
LCH.Clearnet, the clearing house, saw revenue increase by 14pc with growth coming from rising trade volumes in over-the-counter derivative products.
Revenue from information services, which includes the recently merged FTSE Russell index business, rose 10pc to £141.5m.
Technology services provided the only weak spot, with revenues down 17pc, after projects for customers fell behind schedule.