London Stock Exchange Group Plc · LSE:LSEG
London Stock Exchange — Merger or Acquisition (June 2016)
34 slides from London Stock Exchange's merger presentation, Jun 1, 2016
Slide 1: Recommended All-Share Merger: Creating a Leading Europe-based Global Markets Infrastructure Group
Recommended All-Share Merger: Creating a Leading Europe-based Global Markets Infrastructure Group June 1, 2016
Slide 2: Disclaimer
Disclaimer No liability whatsoever is accepted and no representation, warranty or undertaking, express or implied, is or will be made by London Stock Exchange Group plc ("LSEG“ or “London Stock Exchange”) or Deutsche Börse AG ("Deutsche Börse“) or the new holding company HLDCO123 PLC (“HoldCo”) or a
Slide 3: Contents
Contents 1. Strategic Rationale and Stakeholder Benefits 2. Combined Group Business Overview 3. Financial Highlights 3
Slide 4: 1. Strategic Rationale and Stakeholder Benefits
1. Strategic Rationale and Stakeholder Benefits
Slide 5: Industry-defining and value-enhancing combination
Industry-defining and value-enhancing combination Combination enables shareholders of LSEG and Deutsche Börse to participate in the significant value creation opportunity through their interests in HoldCo Accretive to adjusted cash earnings for both sets of shareholders in year one(1) Strong Deliver
Slide 6: Compelling strategic rationale
Compelling strategic rationale Deep liquidity pools in EU benchmarks (in equities, London is Europe’s largest capital market with a deep index, interest rates, power and gas) and cash markets in pool of liquidity and international issuers and investors Europe’s largest economy London is home to AIM,
Slide 7: Creating a Europe-based markets infrastructure group with global reach
Creating a Europe-based markets infrastructure group with global reach Combined Group has operations in over 30 countries Over 70 strategic partnerships around the world Combined Group well positioned in Asia and North America San Francisco Chicago Toronto Boston Beijing Seoul New York Tokyo Dubai S
Slide 8: Brings together leading European and Global businesses
Brings together leading European and Global businesses AIM Leading global financial centre Access point into largest European Geopolitical role as a link to Asia economy and North America London Primary European regulatory hub A leading global Indexing and OTC rates clearing business Luxembourg A le
Slide 9: Combined Group will have a strong industry position
Combined Group will have a strong industry position 2015 Total Income (€, £ in billions) Create a leading Europe-based €4.8 global markets infrastructure group £3.5 €4.2 Invests in innovative services / £3.1 state-of-the-art infrastructure Helps Europe maintain and enhance its capital markets €3.1 i
Slide 10: Combined Group supports European Capital Markets Union objectives
Combined Group supports European Capital Markets Union objectives Strengthens European Support Customers and Accelerate Capital Capital Market Stakeholders Markets Union Create and develop a liquidity Strong partner for customers European platform for bridge to facilitate trading and and regulators
Slide 11: Combination of London and Frankfurt, enhancing both financial centres domestically and internationally
Combination of London and Frankfurt, enhancing both financial centres domestically and internationally Industry defining combination of London Stock Exchange Group and Deutsche Börse Highly complementary combination of businesses and geographic footprint, enhancing the product offering and accelerat
Slide 12: Enhanced positioning for London
Enhanced positioning for London London Merger reinforces London’s role as leading global financial centre Leading global financial centre Creates UK TopCo, London-based UK Geopolitical role as link to Asia plc global markets infrastructure leader and North America Further strengthens position in Mos
Slide 13: Enhanced positioning for Frankfurt
Enhanced positioning for Frankfurt Frankfurt is home of the ECB and Frankfurt access point to Europe’s largest economy Access point into largest European economy and its Home of leading post trade services position as the leading Eurozone providers in multi-asset class clearing: industrial powerhous
Slide 14: Addressing changing global customer needs and providing benefits to all stakeholders
Addressing changing global customer needs and providing benefits to all stakeholders Enhanced growth profile with diversified multi-asset revenue streams Shareholders Meaningful value creation Attractive capital return policy Creates deeper liquidity pools and more transparent markets Simplifies and
Slide 15: 2. Combined Group Business Overview
2. Combined Group Business Overview
Slide 16: Leading positions across each of our global business lines
Leading positions across each of our global business lines Capital Markets Post Trade Information Services and Technology Primary and Derivatives Custody and secondary cash Clearing Index Technology Market data trading settlement markets UnaVista Monte Titoli RNS SEDOL IDEM globeSettle CC&G Real-Tim
Slide 17: Truly multi-asset class with leading positions across derivatives, equities, fixed income, FX and energy
Truly multi-asset class with leading positions across derivatives, equities, fixed income, FX and energy products Global Derivatives Traded Products Cover Multiple Asset Classes (Exchange Listed Traded Contracts, 2015 m) 3,532 Combined Group 2,321 2,272 Derivative Products 1,999 1,174 1,046 Equity 3
Slide 18: Creating a leading venue for capital formation and facilitating economic growth in Europe
Creating a leading venue for capital formation and facilitating economic growth in Europe The Combined Group will facilitate European growth and expansion Powering sustainable economic growth, investment and Supports Europe’s 23 million small and medium-sized enterprises, long-term job creation as w
Slide 19: Platform of choice for risk and balance sheet management
Platform of choice for risk and balance sheet management Clearing Value (Initial Margin Pool, €bn) Aggregate margin pools of c.€150bn – significantly contributes to safety, resiliency and transparency of global markets 148 The Combined Group will meet non-discriminatory open access provisions, acros
Slide 20: Global post trade services positioned at core of Combined Group
Global post trade services positioned at core of Combined Group Assets under Custody (2015, €trn) 27.5 In T2S world, Combined Group even better positioned to attract assets and issuers – leading position in equities and fixed income 16.6 13.3 With over €16tn AuC and its collateral management capabil
Slide 21: Creation of a leading, multi-asset Information services business
Creation of a leading, multi-asset Information services business Combined Group Other Information Information Other 12% 29% 16% 17% Index 39% Information 61% Index Index 67% 59% Total income: €295m €713m €1,008m Source: Company information, Dec 2015; Proforma financial information A Global Informati
Slide 22: A global index leader which can capitalise on opportunity-rich environment
A global index leader which can capitalise on “opportunity-rich” environment Index Linked AuM in ETFs ($bn) Leading Index Business 832 Leading global index brands with broad adoption by asset owners, asset managers and traders 506 Highly complementary - FTSE Russell global leading 445 benchmarking e
Slide 23: 3. Financial Highlights
3. Financial Highlights
Slide 24: Attractive financial profile
Attractive financial profile Balance Balance sheet with combined ~1.8x leverage as at December 2015(1) and ~1.0x sheet and leverage in medium term(2) dividend Combined Group intends to adopt a progressive dividend policy within the existing policy range of both London Stock Exchange Group’s and Deut
Slide 25: Cost savings of ~€450m per annum in year three post transaction close
Cost savings of ~€450m per annum in year three post transaction close Corporate centre Harmonisation of trading and post trade Business platforms based on best of breed segment ~30% technology in the Combined Group optimisation Technology enabled Reduction of project spending in ~20% efficiencies op
Slide 26: Revenue synergies of at least €250m p.a. in year five post transaction close
Revenue synergies of at least €250m p.a. in year five post transaction close Custody, settlement, • Building on the commercial expertise, intellectual & collateral mgmt property, complementary geographic footprints Index and Index and and distribution networks of the Combined Group’s information inf
Slide 27: Significant additional revenue growth opportunities possible
Significant additional revenue growth opportunities possible Key market statistics Provide enhanced trading and clearing Portfolio Derivatives trading and products and services by unlocking the clearing total market size margining customer benefits created through portfolio services ~€6bn p.a. (1) m
Slide 28: Diversified revenue mix
Diversified revenue mix 2015 Revenue by Product(1) 2015 Revenue by Geography(2) 2015 Revenue by Type Information Rest of Services & Cash World Non- Technology Market APAC 1% Transactional UK Rest of 5% 14% Europe 28% 30% 30% 54% 46% 38% 21% 15% Settlement, 19% Custody & Germany Collateral North Deri
Slide 29: Strong capital position and balance sheet flexibility
Strong capital position and balance sheet flexibility Leverage on 2015 basis of ~1.8x Leverage of 1.0x expected to be achieved in medium term Financial flexibility to pursue additional strategic initiatives and to finance future growth Strong balance sheet and free cash flow generation will allow th
Slide 30: Anticipated transaction timetable
Anticipated transaction timetable UK timings German timings Documents published 1 June • Scheme document posted • Exchange Offer launched • HoldCo prospectus published • General Meeting and Court Meeting 4 July • Shareholder vote • End of initial acceptance period 12 July (~6 weeks) • Publication of
Slide 31: Industry-defining and value-enhancing combination
Industry-defining and value-enhancing combination Combination enables shareholders of LSEG and Deutsche Börse to participate in the significant value creation opportunity through their interests in HoldCo Accretive to adjusted cash earnings for both sets of shareholders in year one(1) Strong Deliver
Slide 32: Appendix
Appendix
Slide 33: Key transaction terms
Key transaction terms Deutsche Börse and LSEG to combine under new Holding Company (“UK TopCo”) UK TopCo will issue shares in exchange for Deutsche Börse shares and LSEG shares UK TopCo securities exchange offer for Deutsche Börse Acquisition of LSEG shares via scheme of arrangement Structure UK Top
Slide 34: Governance for the Combined Group
Governance for the Combined Group • Unitary board of 16 directors with equal representation from LSEG and Deutsche Börse • It is expected that the Board will subsequently be reduced to 14 directors as a non-executive director nominated by each of LSEG and Deutsche Börse will stand down • Constituted
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