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Commenting on LSE shareholders approving the merger with Deutsche Borse, Professor John Colley said: "Brexit has undoubtedly clouded the future for the stock exchange link up and raised concerns for employees, regulatory authorities, politicians and LSE shareholders. For shareholders, though, there are still clear benefits.
"LSE shareholders retain a strong position in the EU territories, while Deutsche Borse shareholders benefit from a greater global presence. Deutsche Borse would also be well positioned to provide the various markets that the EU may require to be operated within the Eurozone such as Euro trading. Their link with the LSE will be invaluable in facilitating this transfer of skills, expertise and people.
"However, while the merger has been billed a 'merger of equals' this is unlikely to persist. 'Mergers of equals' have a difficult history due to an inability to provide clear leadership and disputes between the parties leading to inertia. One partner normally prevails. In this case as Deutsche Borse has provided the CEO it is most likely to dominate.
"Deutsche Borse is already under pressure from German regulatory authorities to move the Head Office to Frankfurt. This would probably not be acceptable to the UK. However, what is said and promised to facilitate a deal does not provide assurance for long. We have seen many businesses default on promises necessary to facilitate deals. The deal may well flounder on this issue as neither London or Frankfurt wish to see their influence as financial centres diminish. Similarly the loss of highly paid jobs will be keenly felt.
"The Paris Bourse is looking on with keen interest as it would wish to see the deal fail. Failure would enhance its prospects of collecting the financial fall-out from Brexit in terms of London business. If the deal runs then Paris is likely to suffer as Frankfurt will be better positioned to rapidly accommodate transfer and dominate European financial markets. Large businesses want to be listed on the biggest exchanges. Paris would end up hosting little more than national businesses.
"If the deal now fails, which many believe will be the case, then LSE is 'in play'. Chicago's Intercontinental Exchange may well have the support of investment banks to make an approach. Perhaps this will serve as a an early case of the UK looking west for ties rather than east."
Professor Colley is a Professor of Practice in the Strategy & International Business and researches large takeovers. He was also involved in a hostile takeover while managing director of a FTSE 100 company.
