London stock exchange shareholders to vote on German deal

Shareholders in the London Stock Exchange are due to vote on a planned merger with its German counterpart Deutsche Boerse.

The two agreed a $27bn (£20bn) deal earlier this year but the Brexit vote has raised questions about how it should be implemented.

Both companies have said the outcome does not affect the logic of the deal.

However Germany's regulator, Bafin, said the headquarters could not be in London, as had been 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."

Bafin does not have a veto on the deal but it is thought that Deutsche Boerse is likely to take its concerns seriously.

'Compelling rationale'

In a joint statement released shortly after the UK's referendum the companies said the outcome did not affect "the compelling rationale of the merger".

In fact, the head of the Deutsche Boerse Joachim Faber said the decision made it "ever more important to maintain and foster ties between the UK and Europe".

A source close to the deal has told the BBC it is expecting "overwhelming" support from shareholders in the London Stock Exchange.

David Cumming, head of UK equities at Standard Life Investments, said on the BBC's Today programme, that he also believed shareholders in both the London Stock Exchange and the Deutsche Boerse would back the deal.

"It is very likely they'll approve the deal (on Monday), the Germans still have to vote and to be honest they'll approve the deal as well because management teams from both sides are supportive and it is a long time in coming.

"I think there will potentially be political interference from German regulators and politicians but it is not entirely clear they will scupper the deal.

"They don't like the fact the headquarters are here in Britain, but unless there is a significant change the deal will go ahead."

The deal still needs to be approved by regulators and, according to Reuters news agency, any major changes to it could need further shareholder approval.

As it stands, the deal is expected to be approved later on Monday with German shareholders due to vote on it on 12 July.

The companies hope to complete the deal in early 2017.