LSE chief says he'll stay as EU looks set to block Deutsche Börse merger
The chief executive has indicated he is ready to stay on at the company amid expectations that the controversial deal to merge with German rival Deutsche Börse will be blocked by Europe’s competition authorities.
Xavier Rolet had been expected to step aside to allow his counterpart at Deutsche Börse to take the helm of the combined entity when the deal is completed.
However, the tie-up was thrown into doubt on by announcing the was “unlikely to provide clearance for the merger” after imposing a demand that the exchange sell its Italian trading arm MTS to ease competition concerns.
While repeatedly insisting the LSE was continuing to work on the politically charged merger with Deutsche Börse, Rolet also set out a case for the exchange to survive on its own in the post-Brexit world. He has issued several warnings about Brexit, .
The LSE, which has tried twice previously to merge with Deutsche Börse, is itself listed on its stock market where its shares dipped after the results despite the 20% rise in the dividend to 43.3p a share. A special dividend of 58.2p is due if the deal with Deutsche Börse completes.
After 18 acquisitions during his eight years in charge, Rolet said there were still opportunities for other deals. He said he was very positive about the outlook for the exchange.
“In the event that this transaction did not successfully conclude then we are back to square one and I am back in the seat and working hard with my colleagues to ensure the business continues to thrive, which it has despite the demands of such a complex transaction,” said Rolet.
As well as repeatedly saying he could not prejudge the outcome of the European regulatory process, he said: “It looks like my retirement has been postponed.”
It is not a “a plan b, c, d or e. It’s just a continuation of our strategy,” he added.
Rolet would not be drawn on the insider trading investigation into Carsten Kengeter, the Deutsche Börse chief executive who is due to run the enlarged exchange. The German exchange has before the deal was announced a year ago are “without foundation”.
Brussels is due to give its verdict on the deal on or before 3 April. The commission has insisted the case is ongoing. “ It has not taken a decision,” the commission said earlier this week.
The rationale for the “industry-defining” tie -up was as justifiable as when it was announced a year ago, Rolet said. Announced just months before the EU referendum, the third attempt at merger between the two exchanges was controversial from the outset as it gives Deutsche Börse 54% ownership of the enlarged business but puts its headquarters in London.
Making a passionate plea for the tie up, Rolet said: “Hatred is rising everywhere in the world. What do you do against so much hatred? What we can do is offer ways to help entrepreneurs, young companies to have access to long-term, patient capital. This is not a nationalism fuelled project.”
The “last minute” request by the commission that it sell its 60% stake in MTS – a platform to trade Italian government bonds – had put the LSE in a “very difficult position”. Italy comprises 25% of its profits.
The commission has insisted that the demand was part of the usual process of investigating a deal.
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