LSE and Deutsche Boerse may go Dutch to win over regulators

London Stock Exchange Group Plc shareholders approved Deutsche Boerse AG’s acquisition of the 300-year-old exchange Monday in a near-unanimous vote. That was the easy part.

About 99.9 per cent of shareholders voted in favour of the deal, according to a statement from the company. Still, the deal, thrown into doubt by the UK’s decision to leave the European Union, has been getting push back from German regulators who don’t want the combined exchange to be based in London. A compromise may mean moving the new company’s location outside of the UK to obtain approval for the merger, people familiar with the matter said.

Options could include moving the holding company from London to a different location within the EU, such as the Netherlands, said the people, who asked not to be named citing confidentiality. Such a move would only come after LSE shareholders approve the existing merger plan, Deutsche Boerse’s tender offer succeeds and the deal is completed, they said.

Under the current plan, the exchanges will keep separate operating headquarters in London and Frankfurt, and the holding company would be based in the U.K. capital.

While LSE investors approved the deal at Monday’s meeting, one shareholder in attendance asked executives for assurances that the headquarters would not be moved to Frankfurt. Management didn’t directly respond, instead highlighting the global nature of the company.

The headquarters “is important,” said Hugh Marsden, another LSE investor at the meeting. “London is the premier financial capital, and it will continue to be -- cannot move to Paris or Frankfurt.”