London Stock Exchange chief Xavier Rolet: We don't need to merge to survive Brexit

Takeover target London Stock Exchange has shot down suggestions it was rushing into the arms of a German suitor to dodge the impact of Britain’s possible exit from Europe.

Boss Xavier Rolet said a leave vote would fail to dent the group’s close ties with traders and investors around the world. This is despite concerns London’s stock markets would be hurt by a Brexit.

“LSE is a global company and we have global infrastructure. We do not have any geographic policies, we position ourselves for [overseas] clients in a way we can service them,” he said. “I’m happy with London’s global reach. The group has international aspirations.”

An EU referendum vote has been scheduled for June 23. Rolet was a signatory to a letter signed by nearly 200 business executives supporting Britain’s continued EU membership last month.

He repeatedly refused to answer questions about a number of suitors circling the group, citing takeover rules preventing him from speaking on the subject.

The operator is in talks over a £20 billion merger with Deutsche Börse despite a rival interest from US operator Intercontinental Exchange, owner of the New York stock exchange.

Bankers for Deutsche and ICE are jockeying for position to try to engineer a takeover of the highly sought-after London exchange, although ICE is yet to bid.

If ICE moves it could force a partial break-up of LSE, with plans by the Americans to spin off the British group’s Italian stock exchange and hive off the French arm of LCH.Clearnet.

Rival US operator CME is also understood to be exploring an offer. “We believe the potential merger (with DB) can deliver an industry-defining combination,” Rolet said.

Analysts expressed concerns about the weak underlying growth of the business and what would happen to LSE if the deal fell over.

“Back when Rolet took over it was an equity exchange and now it’s a global leader. But where there has been growth it’s come from consolidation,” Numis analyst Jonathan Goslin said. “It’s trading at high levels at the moment and if this deal doesn’t go through it’s looking at being left an exchange business again.”

Full-year results were flattered by the inclusion of fees generated by its Russell Investments business, which it is still hoping to spin off this year.

Including acquisitions made last year revenues rose 78% to £2.3 billion. Stripping them out, the growth was more sluggish, up 2%.

Adjusted pre-tax profits increased by 31% to £643.4 million, when takeovers are included.