LCH and Clearnet agree terms on merger - FT
03 November 2003 | 2670 views | 0
The merger between London Clearing House (LCH) and its Paris counterpart Clearnet is set to go ahead after shareholders committed the required €91.4m to buy a 7.6% stake in the new merged company - to be sold by Clearnet owner Euronext.
According to the report, 85 per cent of the LCH's 124 members have committed to vote in favour of the merger, which would create Europe's largest central counterparty LCH.Clearnet, valued at €1.2bn. The vote takes place in November.
Shareholders had expressed reservations about committing the funds after reports that the London Stock Exchange (LSE) planned to move its clearing business to rival Eurex Clearing, part of Deutsche Börse. Agreement on the payment was reached after the LCH negotiated a clause allowing shareholders to review their position if the LSE does move its business.
The merger has been controversial because it joins mutually-owned LCH with for-profit company Clearnet. The paper says Euronext is selling shares to limit its involvement in the merged entity in a move to reassure market users that LCH.Clearnet will remain independent.