London Stock Exchange enters into exclusive talks with Euronext over sale of French clearing business

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The London Stock Exchange Group has entered into exclusive discussions with rival Euronext over the sale of its French clearing business.

And the deal for LCH SA, which could be crucial to the success of the London Stock Exchange’s mega-merger with Deutsche Boerse, could still be agreed this side of Christmas, City PM understands.

The London Stock Exchange announced in September that it was exploring the sale of LCH SA, which has been valued at between €400-600m (£337-505m), in anticipation of concerns around clearing from the EU competition regulator.

Read more: London Stock Exchange seeks to wrap up LCH sale as regulatory battle looms

And the European Commission confirmed last week to the exchanges that it would be focusing its investigation into the merger on clearing.

Euronext has always been seen as the favourite in the race for LCH SA, although US firms including CME Group and Nasdaq were also linked with a move for the company.

Announcing the exclusive talks with Euronext this morning, the London Stock Exchange said:

There can be no certainty that this will lead to any transaction or as to the terms upon which any transaction might proceed.

Read more: JP Morgan Cazenove to oversee sale of London Stock Exchange’s clearing arm

Euronext confirmed the exclusive talks in a statement this morning:

At this stage, there can be no certainty that these discussions will lead to a transaction, or as to the terms on which a transaction, if any, might be agreed. Any transaction would be conditional on the successful closing of the merger between LSEG and Deutsche Boerse and other conditions.

A further announcement will be made in due course.

City PM first reported that the London Stock Exchange was aiming to agree a deal, which would be dependent on completion of its merger with Deutsche Boerse, for LCH SA before Christmas last month.

Once this deal is agreed, the European Commission can consider it as part of its merger investigation, which it is due to complete by 6 March next year.