After Intercontinental Exchange rules out bid, here are the next challenges for the London Stock Exchange-Deutsche Boerse merger
With the Intercontinental Exchange (ICE) out of the picture, analysts covering the London Stock Exchange-Deutsche Boerse merger are turning their attention to other challenges facing the deal.
Antitrust, a potential Brexit, interest from other rivals and shareholder approval are among the "hurdles" now being faced.
Exane BNP Paribas analysts believe there is more than half a chance the deal will be blocked. And Credit Suisse rates its chances of securing competition approval at 50-50.
LSE's share price fell four per cent yesterday after ICE pulled out of a bid for the UK company.
Read more: London Stock Exchange shares plunge after US rival rules out bid
But Jonathan Goslin, an analyst at Numis, believes the withdrawal of interest, and switch to a "one horse race", will increase the chances of a deal with Deutsche Boerse being completed.
And, suggesting Deutsche Boerse might not be willing to improve its offer if an ICE offer were to be made, he said this could benefit LSE.
"It would have added another complication, another hurdle, in the deal going through," Goslin told City PM
"Given that there are already so many hurdles for such a deal to complete, it would have made it that much more difficult."
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Read more: London Stock Exchange battle heats up
Arnaud Giblat and Gregory Simpson of Exane BNP Paribas said in a note today that while ICE could come back and make another offer for LSE, they see this as unlikely.
But they suggested bids for LSE from the Chicago Mercantile Exchange (CME) and Hong Kong Stock Exchange should not be ruled out.
They noted CME "has significant firepower and less antitrust issues".
On the likelihood the LSE-Deutsche Boerse deal will go through, the note added: "We see a greater than 50 per cent probability of the [LSE-Deutsche Boerse] deal being blocked."
And the analysts said they believe a UK Brexit vote would be a "deal stopper".
Read more: Third time lucky: LSE and Deutsche Boerse try again
Martin Price and Tom Mills of Credit Suisse gave the deal a 50-50 chance of being completed in a note today.
On potential competition issues, the note said: "While ICE's decision not to bid clears the way for LSE to proceed with the [Deutsche Boerse] merger, we put the chances of the deal securing antitrust approval at 50/50."
Yesterday, ICE attacked LSE executives for a “disappointing level of engagement”.
And while the LSE hit back with a statement indicating it had played by the rules, Credit Suisse expects shareholder questions.
The note said: "We believe LSE shareholders are likely to demand further clarification to understand why ICE was not able to obtain sufficient information to prepare an offer, but this appears to be off the table for now."
London Stock Exchange-Deutsche Boerse merger timeline
23 February: LSE confirms it is in talks with Deutsche Boerse, marking the pair's third attempt in two decades to merge.
26 February: The companies announce LSE chief executive Xavier Rolet would depart in the event of a merger, with Deutsche Boerse's Carsten Kengeter taking charge. The merged stock exchange group would have its headquarters in London rather than Frankfurt.
1 March: Intercontinental Exchange confirms it is considering a bid for the LSE. Shares in the LSE shoot to a record high.
6 March: Chicago Mercantile Exchange (CME) is also reported to be considering an LSE bid.
16 March: LSE and Deutsche Boerse set out the terms of a £21bn "merger of equals".
4 April: Report suggests ICE has secured £10bn funding for its LSE takeover bid.
5 April: In an interview with City PM, Rolet fires a warning shot at attempts from the US to disrupt the merger.
17 April: After criticism and statements from politicians in the UK and Germany, sources close to the LSE-Deutsche Boerse deal rule out the possibility of the merged company having its headquarters anywhere but London.
20 April: Reports suggest rival European stock exchange Euronext is considering options for how to block the deal.
30 April: Both the LSE and Deutsche Boerse are forced to retract or clarify statements made by executives about the deal and a possible bid for ICE.
4 May: ICE says it has "no current intention to make an offer" for the LSE.