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Deutsche Börse lowers acceptance threshold for LSE merger


German stock exchange Deutsche Börse has lowered the minimum acceptance threshold on its proposed merger with the London Stock Exchange (LSE) to make sure that it succeeds.

The public exchange offer made by the new holding company that is to be the parent of both LSE and Deutsche Börse was subject to a minimum acceptance level of 75% of the shares in Deutsche Börse. However, this threshold will now be reduced to 60% to allow index funds to participate, Deutsche Börse said. The deadline for acceptance has now been extended to 26 July 2016, it said.

Index funds represent up to 15% of the company’s shares and are unable to accept the offer until the minimum acceptance threshold has been reached, Deutsche Börse said.

Shareholders of the LSE "overwhelmingly" voted to merge with the Deutsche Börse last week, despite the UK's vote to leave the European Union.

Mergers and acquisitions expert Jonathan Beastall of Pinsent Masons, the law firm behind Out-Law.com, said: "The public documentation allows the possibility of a minority interest in Deutsche Börse if the thresholds to squeeze out the minority cannot be achieved under the various methods available under German law. The minimum required to do this would be 90% of the Deutsche Börse shares being acquired."

"If the offer is declared unconditional at 60% there will be a larger number of shares to be acquired to get to the 90% target. If there is a failure to squeeze out the minority then fewer shares in the new holding company will be issued to Deutsche Börse shareholders, which will affect the respective shareholding interests of LSE and Deutsche Börse shareholders in the enlarged group," Beastall said.

The exchange operators had agreed on the proposed £21 billion merger in February, and recommitted to the deal the day after the UK referendum.

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