London Stock Exchange / Deutsche Boerse

Other Suitors, the UK Referendum and Antitrust Risks

London Stock Exchange / Deutsche Boerse

Publication Date: March 30, 2016

Research Report Overview

Investors seem fixated on understanding when, and to what extent, Intercontinental Exchange (ICE US) will disrupt the agreed LSE/DB ‘merger of equals’ by counterbidding for LSE. This is priced into the risk arbitrage spread which is currently trading at 9.5% through the terms. While hoping for upside through a competitive situation, event driven funds and LSE investors should not forget the multiple significant risks that any acquirer will face in a sector that is notorious for failed transactions.

Contents (77 Pages):

1. Evolving Exchanges and the Importance of Central Counterparties 2. London Stock Exchange (LSE): What Makes It Attractive? 3. Deutsche Boerse (DB): Strategic Rationale for the Merger 4. Intercontinental Exchange (ICE): Ability to Disrupt the Deal 5. CME Group (CME): Ability to Disrupt the Deal 6. Antitrust Regulators’ Assessment of LSE/DB 7. Antitrust Regulators’ Assessment of LSE/ICE and DB/CME 8. Potential Outcomes of the Antitrust Reviews 9. Potential Systemic Risks of CCPs and the UK Public Interest Test 10. The UK Referendum on EU Membership and its Impacts 11. Relevant Precedent Deals in the Context of Risk Arbitrage Trading 12. Deal Structure and Timing Expectations 13. Financial Valuation, Break Prices and Implied Probabilities

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