Brexit: The London Stock Exchange’s $20bn merger with Deutsche Boerse now at risk
The deal between LSE and Deutsche Borse is still subject to regulatory approvalReuters

London Stock Exchange (LSE) shareholders are set to vote on a proposed merger with German counterpart Deutsche Boerse, after both firms indicated Britain's vote to leave the European Union will not affect their plans.

The two stock exchange operators agreed a $27bn (£20bn, $26.6bn) deal back in March under which Deutsche Borse's shareholders would hold 54.4% of the new company, while LSE shareholders would hold the remaining 45.6%.

However, the proposed merger was cast under a cloud in the months leading up to Britain's EU referendum, with a number of regulators suggesting the deal could have been called off in the event of a Brexit.

Britain has since voted in favour of leaving the EU and both companies have stressed the outcome of the referendum will not have any impact on the deal, with Deutsche Borse's chief Joachim Faber indicating the vote made it "ever more important to maintain and foster ties between the UK and Europe".

However, Bafin, Germany's regulator, said the headquarters of the newly merged company could not be located in London as originally planned.

"Without doubt [...] it is hard to imagine that the most important exchange venue in the Eurozone would be steered from a headquarters outside the EU," said Felix Hufeld, Bafin's president. "There certainly has to be an adjustment here."

LSE shareholders are expected to vote in favour of the deal, later on Monday (4 July), while Deutsche Borse's shareholders will vote on 12 July. At the time of writing, only 0.95% of Deutsche Borse shareholders are understood to have given their support to the merger, although that is fairly common among German businesses, where most of the shares are not tendered until the last couple of days before the deadline.

The two firms, which had previously attempted to merge in 2000, and again in 2004, are understood to expect the deal to be completed early next year.

The merger, which would create one of the largest financial markets operator in the world, is still subject to regulatory approval and approximately 40 watchdogs worldwide are expected to scrutinise the proposed tie-up.