London Stock Exchange seals £22 billion merger with Germany's Deutsche Börse

London Stock Exchange has agreed its £21.6 billion merger with Deutsche Börse, saying the combination would create the largest financial exchanges business in the world, able to counter US rivals who could still try to break up their party.

LSE chief executive Xavier Rolet, who will leave after a year bedding the merger down, said: “This is a merger of equals between two very strong businesses which will create a Europe-based premier force in global markets infrastructure.”

His counterpart Carsten Kengeter of Deutsche Börse, who will head the merged firm, said: “We share a strategic vision which will deliver more than the sum of the parts to our stakeholders.”

The companies said they had identified €450 million (£354 million) of savings through merging.

Rolet admitted this would probably mean job cuts and although he would not specify how many said they would “be balanced between London and Frankfurt”.

Today’s deal, three weeks after news of the talks first emerged, opens the door to potential rival bids from America’s ICE and CME rival exchange giants.

Rolet said he had not heard from either of them. ICE has a put or shut up deadline of March 29 to launch a rival bid.

The structure of the deal is unchanged with LSE shareholders ending up with 45.6% of the as yet unnamed new group and Deutsche Börse holders with 54.4%. But Rolet denied this meant the Germans would dominate.

“The new company will be a UK plc headquartered in London and will pay tax in this country,” he said. “The biggest group of shareholders in both companies are American and British investors own 20% of Deutsche Börse while Germans only own 15%.”

Stock Exchange chairman Donald Brydon will chair the merged business with Deutsche’s Joachim Faber his deputy and Kengeter chief executive. The LSE’s David Warren will be finance director and each side will put up a further six non-executive directors.