There was a negative reaction from investors to the prospect of a tie up between the London Stock Exchange and Borsa Italiana, the Milan stock market. The LSE confirmed it is in discussions and various reports said they are at advanced stage and involve a share-based offer of about 1.5 billion euros.
Such a deal would bolster the LSE’s trading volumes against European rivals such as NYSE Euronext and Nasdaq. The London Stock Exchange was the second largest in Europe last year in terms of shares traded, but the comparison is made more complicated by the fact that NYSE Euronext is a US-European company. Borsa Italiana is the fifth biggest, after Frankfurt and Madrid.
If it happens the London-Milan merger would be the latest in a series of consolidations in the industry but the LSE has been a reluctant partner in the past. It rejected approaches or interest from the Nasdaq, the New York Stock Exchange, Deutsche Boerse, Euronext and Australia’s Macquarie Bank. This move is seen by some analysts as the LSE acting defensively to protect itself from an unwanted takeover.