LSE and Deutsche Boerse have agreed a merger, which was first mooted last month.
The two giant exchanges said the deal “brings together London, a leading global financial centre, and Frankfurt, the home of the ECB and access point to Europe’s largest economy, in an industry-defining combination”.
The combined group will maintain headquarters in both Frankfurt and London. They say the tie-up will generate €450m per year of cost savings three years after completion, with “significant opportunities for revenue synergies”.
“Under this industry-defining combination, the companies will merge to create a leading Europe-based global markets infrastructure group, resulting in a significantly enhanced product offering for customers and in leading positions across multiple asset classes,” says a statement from the companies.
Carsten Kengeter, chief executive of Deutsche Börse, says: “Strengthening the link between the two leading financial cities of Europe, Frankfurt and London, and building a network across Europe with Luxemburg, Paris and Milan will strengthen European capital markets. It is the logical evolution for our companies in a fundamentally changing industry.”
In particular, the two firms said the deal will enable asset managers to access more innovative benchmarking and index products.
“Through FTSE Russell and Stoxx, the combined group will be well positioned to respond to growth trends in the asset management industry, including the shift to passive investing and demand for innovative benchmarking tools, such as factor indexes and fixed income indexes,” the statement added.
The statement from the two companies comes after it was revealed last month that the two firms were in talks to create one of the world’s largest exchanges.
Later reports came that US group Intercontinental Exchange was considering a rival bid for LSE.
However, it might not be smooth sailing for the tie-up of the two firms, who have previously warned that a potential Brexit could harm the deal.