LSE and Deutsche Boerse in merger talks

The London Stock Exchange on Tuesday confirmed it was in discussions to merge with Germany’s Deutsche Boerse. The LSE said in a statement that the two firms are “in detailed discussions about a potential merger of equals of the two businesses.”

It said it anticipates that Deutsche Boerse shareholders will hold 54.4% of the combined group while LSE shareholders would hold 45.6%. “The combination of LSE and Deutsche Boerse’s complementary growth strategies, products, services and geographic footprint would be expected to deliver an enhanced ability to provide a full service offering to customers on a global basis,” the statement said.

Exchanges are largely looking to mergers and expansion as a way to stay relevant in a rapidly globalizing securities marketplace. Size and scale are important as global traders look for markets that have adequate trading activity and availability of a variety of securities. Intercontinental Exchange (ICE), for instance, has been aggressively buying other exchanges and market places including NYSE Euronext for $10.8 billion in 2013.