Watching the London Stock Exchange and Deutsche Boerse merger talks

Paternoster Square
By Tutor Lauren O’Brien

3 March 2016

One of the bigger financial headlines in recent days is the proposed merger between the London Stock Exchange and Germany’s Deutsche Boerse.

More details can be found here.

The two organisations are in detailed discussions that the German company called a “merger of equals”. Both organisations saw their share prices rise as a result. It’s the third time that LSE and Deutsche Boerse have talked about a deal, the first was in 2000, then again in 2004-5.

For TPS students sitting Advanced Finance (Afin) try to have a think about the positive reasons behind a stock exchange merger.

What the proposed merger means to you

We discuss the reasons behind company mergers in Afin module 14, but, obviously, a number of those reasons won’t apply here. (For example, access to assets is unlikely to be a factor behind this particular merger. There will, though, likely be a number of synergies that can be achieved if this deal goes ahead.)

Now, Afin students will also know about stock exchange regulations from Afin module 13. Current Afin students might be worried that if this merger goes ahead, it could lead to a change in some of the module 13 content. However, regardless of whether the deal goes ahead or not, the 2016 Afin notes are already finalised and based on a cut-off date of 30 November 2015. Therefore, even if this deal goes ahead, it won’t impact any Afin student exams in 2016.

If your TPE case study involves a listed company, or a company that plans to list in the future, it’s worth knowing if this merger happens

For TPE students, I’d keep an eye on this potential deal if I were you. For example, if your TPE case study involves a listed company, or a company that plans to list in the future, it’s worth knowing if this merger happens.

It might let you add a sentence or two into your answer that’s more relevant to current events. Don’t go overboard though. Just like Afin, TPE also operates under a specific cut-off date, and whether this merger goes ahead or not won’t affect the technical content for your TPE exam.

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