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Commenting on the LSE saying its merger with Deutsche Boerse could lead to 1,250 job losses Professor John Colley, Warwick Business School Professor of Practice in the Strategy & International Group, said: "The announcement does not indicate where the job losses will fall, suggesting they will be spread between the businesses. There is concern that the bulk may fall in London as redundancies will be cheaper there than in Germany. Secondly there is some scepticism as to whether this is truly a 'merger of equals' or a German takeover. No doubt this will become clearer with time.
"Some would say that the LSE and Deutsche Boerse are 'jumping the gun' by announcing up to 1,250 job losses or 14% of the workforce, as part of the €450 million savings from the €30 billion merger.
"The announcement suggests they do mean business, but it could look impetuous if the European Commission objects to the tie-up. This remains a possibility as there are plenty of competition concerns and, indeed, political sensitivities to the 'merger of equals'. Treatment of the two clearing houses, LCH.Clearnet and Eurex, is bound to be an issue and the EC is likely to require some assurances around them remaining separate. Otherwise a merger may be viewed as 'too big to fail'.
"The announcement does strongly suggest that shareholder consultation on both sides points to clear support for the merger. Shareholders will not be an impediment to the deal.
"Advisor fees on the friendly merger are a staggering €307 million, the bulk of which have been incurred by the LSE. These do seem excessive in view of the limited nature of the necessary work.
"There are €160 million of revenue benefits although there is scepticism from many as to whether these are achievable. The combination will be bigger than the two major US exchange networks, ICE and Nasdaq."
