France sticks knife into London Stock Exchange-Deutsche Börse merger

FRANCE’s most powerful business lobby has called on EU competition authorities to block the London Stock Exchange-Deutsche Börse merger over fears that it will trigger an exodus of French companies to London or Frankfurt.

Pierre Pringuet, president of AFEP which speaks for more than 100 of France’s biggest companies, said the huge size of the new Anglo-German group could spark an exodus of listed French companies looking for more liquid stock markets.

AFEP speaks on behalf of French firms such as Air France, Axa, BNP Paribas, L’Oréal and LVMH and many more.

“If French groups leave Paris, France will lose a great deal of sovereignty to Germany and Britain for supervising its own large companies,” Pringuet told Les Echos.

LSE and Deutsche Börse shareholders are expected to vote on the merger next month. All eyes will be on today’s EU referendum outcome, which could change the terms of the deal.

Pringuet also said EU regulators should force a carve-up of the new LSE-Deutsche Börse empire to Euronext, the rival EU exchange which owns the French, Dutch, Belgian and Portuguese stock markets.

“We hope that this merger will not go through. And if it should be allowed, that the various ‘remedies’ will be significant and beneficial for Euronext,” he added.

Euronext has steadily been building substantial firepower to meet the changing landscape after the LSE-Deutsche Börse tie-up.

A recent agreement with the Dutch finance ministry lifting capital requirements, is freeing up cash at the group for bigger deals.

If LSE-Deutsche Börse do spin out assets, the Italian stock exchange and the French arm of LCH.Clearnet would be the most likely candidates, according to analysts.