The biggest European markets deal in decades is going ahead

AP ImagesA trader on the Frankfurt exchange.

The London Stock Exchange (LSE) has agreed merger terms with German stock exchange operator Deutsche Borse.

LSE said in a statement on Wednesday that both parties “have reached agreement on the terms of a recommended all-share merger of equals.” The deal will be done through a new UK holding company.

LSE shareholders will own 45.6% of the new merged companies while Deutsche Borse investors will hold the rest. The deal is one of the biggest market tie-up in decades, creating a new company with a likely market capitalisation of at least £20 billion.

Discussions between the two parties were first revealed last month, although the two parties have considered a possible tie-up for over 15 years. New York Stock Exchange-owner Intercontinental Exchange (ICE) said shortly after that it was interested in crashing the bid for LSE.

LSE CEO Xavier Rolet, who will step down once the merger is completed, says in today’s statement:

We are creating an industry-defining combination which will be a leading global market infrastructure business, very well positioned to create new benefits and efficiencies for our customers and increase value for our shareholders. Our highly complementary businesses will accelerate growth.

Our shareholders will also benefit from substantial cost and revenue synergies. The Combined Group will continue to be fully committed to the real economy, by supporting companies, including the 23 million SMEs across Europe that drive economic growth and job creation. We will create a European leader in global markets infrastructure.

The two companies are forecasting cost savings of €450 million (£354 million) a year once they complete the merger, which is expected to happen in the first quarter of 2017.