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LSE-Deutsche Börse merger 'unlikely'

The London Stock Exchange has said a merger with Germany's Deutsche Börse is unlikely to meet EU anti-trust demands. But the London Stock Exchange said it has not given up and would still continue to pursue a merger.

The London Stock Exchange (LSE) on Sunday said a proposed merger with Deutsche Börse was "unlikely" to address the European Commission's concerns, casting into doubt a tie-up of Europe's two largest market operators.

The LSE said in a statement it would likely not be able to sell a 60 percent stake in Italian fixed income trading platform MTS to address Brussels' anti-trust concerns.

"The LSEG Board believes that it is highly unlikely that a sale of MTS could be satisfactorily achieved, even if LSEG were to give the commitment," LSE said. "Based on the Commission's current position, LSEG believes that the Commission is unlikely to provide clearance for the merger."

Although MTS is a small part of LSE's business, it is a major market for European government bonds, especially in Italy. LSE said in the best interest of shareholders it "could not commit to divesting out of MTS." It added that even it were to sell the trading platform it would require the approval of several European governments.

LSE said that it would still continue to pursue the merger with the German stock exchange operator.

Last month, the exchanges agreed to sell part of clearing house LCH to rival Euronext in order to address EU competition concerns.

A LSE-Deutsche Börse merger would create a financial markets giant to compete with US markets.

cw/jr (AFP, Reuters)

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