Deutsche Bö rse Braced for Regulatory Scrutiny Over LSE Deal

FRANKFURT—The chief executive of Deutsche Bö rse AG said his planned merger with the London Stock Exchange Group PLC wouldn't close before the first quarter of next year because of intense regulatory scrutiny and that U.S. rivals could potentially still torpedo the deal to create Europe's biggest stock-market operator.

"We don't expect the deal to close before next year's first quarter because regulators have to give their OK following shareholder approval," Carsten Kengeter told journalists in Frankfurt Monday.

Mr. Kengeter, who is poised to become chief executive of the combined group, also criticized the French government, which he said had a vested interest in undermining the deal. He noted that the French state holds a 6% stake in Euronext NV, a rival to Deutsche Bö rse and LSE Group.

His comments came in response to statements by French Finance Minister Michel Sapin and the head of the country's central bank, Franç ois Villeroy de Galhau, who earlier Monday raised concerns about the tie-up of Deutsche Bö rse and LSE.

Mr. Sapin said such a move risked curtailing competition and increasing market risk. He reiterated a call for European authorities and other local supervisors to scrutinize the British-German deal.

"We've been in a process of decreasing risk," Mr. Sapin said. "If there is too much concentration, risks would increase."

Mr. Villeroy de Galhau said the creation of a large stock clearing house "could create an operator that is too big to fail."

Mr. Kengeter said Deutsche Bö rse and LSE would keep their clearing houses separate but that customers and financial stability could still benefit.

He also said that U.S. competitors such as Intercontinental Exchange Inc. and CME Group Inc. could potentially bid for LSE or Deutsche Bö rse. ICE in March said it was considering a bid for LSE to rival Deutsche Bö rse, but said earlier this month that it would not place a bid.

Mr. Kengeter said ICE could potentially make a new approach for the LSE in November, when a standstill period ends. He speculated that CME might also be interested in bidding for Deutsche Bö rse should its LSE merger fall apart.

Write to Eyk Henning at [e-mail]

(END) Dow Jones Newswires

May 31, 2016 06:55 ET (10:55 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.