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Business

LSE logs solid results, but merger even more unlikely

Solid results and a big dividend for its shareholders - all could be well for the London Stock Exchange. But plans to merge with Germany's Deutsche Börse are ever more likely to collapse.

The London Stock Exchange (LSE) on Friday presented solid annual results and hiked its shareholder dividend. But the looming failure of its landmark merger with Deutsche Börse overshadowed the good news.

Operating profits were up 5 percent from last year to 500 million euros ($524 million), while bottom-line earnings halved to 176 million euros as the group sold one of its business units with a big loss.

Still the LSE ramped up its shareholder dividend by a fifth - a move which it said reflected the "strong outlook" for the business.

Make-or-break EU probe

The LSE and German group Deutsche Börse, which operates the Frankfurt Stock Exchange, announced their merger plans last year and held onto them - even after the United Kingdom decided to quit the European Union.

But last Sunday the LSE said it would not be able to sell its stake in an Italian trading platform for government bonds, a move the European Commission had made a requirement for greenlighting the merger.

Bildkombo London Stock Exchange Frankfurter Börse

It's the third time LSE and Deutsche Börse are trying to merge

The European Union's executive body's competition probe into the matter remains ongoing, with a final decision expected on April 3.

A failed tie-up would throw the LSE "back to square one," said its CEO Xavier Rolet on Friday. In a statement the group insisted it would "continue to work hard" to make the marriage happen.

Runaway bride all over again?

The two stock exchanges already tried to merge twice - in 2000 and 2005 - but both times failed to convince their shareholders to back the move.

Critics said the LSE's refusal to comply with the European Commission's demands was only a way of pulling out of the deal without losing face. The two parties have been grappling over where the common holding should be based.

"Sometimes engagements should not end in marriage," ETX Capital analyst Neil Wilson told the AFP news agency.

"In the case of LSE, its continental forays have not ended well and perhaps with Brexit looming the chance for a cross-channel merger has come and gone."

mrk/hg (AFP, dpa)

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