Carsten Kengeter, CEO of Deutsche Börse
Kengeter purchased €4.5bn worth of Deutsche Börse stock in December 2015. Reuters

Carsten Kengeter, the chief executive of Deutsche Börse, is being investigated by German authorities over a share purchase he conducted shortly before the company announced a merger deal with the London Stock Exchange Group (LSE).

Kengeter bought shares worth about €4.5m (£3.8m) on 14 December 2015, two months before the German stock exchange operator and LSE announced a £21bn deal, which saw the former's share price rocket.

A Deutsche Börse spokesman told AFP that while Kengeter had "always been transparent" about his share purchase, the investigators were "studying if there is a possible suspicion of insider dealing".

The Frankfurt public prosecutor's office "today investigated at Deutsche Börse AG in respect of a share purchase by its chief executive officer which was carried out on 14 December 2015", the company said in a statement released late on Wednesday (1 February).

The company, which said it was collaborating with prosecutors, added the share purchase was "in implementation of the executive board's remuneration programme as approved by the supervisory board of Deutsche Börse AG. Such a programme provides for an investment of the executive board members in shares of Deutsche Börse AG."

Joachim Faber described the accusations against Kengeter as "groundless", insisting negotiations over a possible merger with LSE did not begin until late in January 2016. A company spokesman said the CEO had "always been transparent about his purchase of shares".

Under the proposed merger, Deutsche Börse's shareholders would hold 54.4% of the new company, while LSE shareholders would hold the remaining 45.6%.

Both companies, which had previously attempted to merge in 2000 and in 2004, said all their main businesses would continue to operate under their current brand names. The merger, which would create one of the largest financial markets operators in the world, is still subject to regulatory approval and approximately 40 watchdogs worldwide are expected to scrutinise the proposed tie-up.

Shareholders of both group's voted in favour of the merger in July and the firms are understood to expect the deal to be completed early next year.