Member Article

London Stock Exchange looking to hive off French clearing business to Euronext

The London Stock Exchange Group (LSEG) has announced it has entered into exclusive discussions with Euronext to sell off its French clearing business LCH SA, as it attempts to fend off anti-trust concerns regarding its €24bn mega-merger with Deutsche Boerse.

LSEG revealed at the end of September that it was looking to sell off its French clearinghouse subsidiary amid fears that the European commission could block its potential merger due to competition concerns.

Despite rumours that CME Group and Nasdaq could be interested in acquiring LCH SA, the LSE has now entered into exclusive negotiations with Amsterdam-headquartered Euronext, although it did say that a transaction was not guaranteed.

In an announcement to the stock exchange this morning, the LSE said that any potential sale of LCH SA would be dependent upon approval from the European Commission and that it was conditional on the Deutsche Boerse merger going through.

Mega mergers expert John Colley, who is a Professor of Practice at Warwick Business School, believes the announcement hints that both sides may still be confident that a merger can go through.

He said: “Despite fears that the EU Competition Commission may reject the €24bn merger between LSE and Deutsche Borse, the parties clearly still believe the deal is viable.

“The EU Competition Commission will have identified and communicated areas of concern which LSE and Deutsche Borse are currently attempting to address.

“New negotiations are progressing with Euronext to buy Clearnet, now called LCH SA, the French clearinghouse, predominantly for interest rate swaps, suggests the bigger deal is still on track.”