Market watchers are split over whether London Stock Exchange Group (LSE) will be able to achieve the level of synergies outlined by management if its merger with Deutsche Börse goes ahead. The German stock trading group has claimed total annual cost synergies of €450m (£353m) would be achieved three years after completion, equivalent to around a fifth of the combined group's 2015 adjusted operating costs of €2.2bn. Deutsche Börse is aiming to achieve around half of these savings within the first year after merging, with the majority coming from duplicated support functions and IT costs.
Analysts at Numis reckon the combined group will be able to achieve 25 per cent in annual synergies. The broker's Jonathan Goslin said LSE has a good track record of squeezing out costs from its deals, referencing its acquisition of LCH Clearnet. "Historically LSE has proved to be very efficient at gaining significant cost synergies from deals," he said.
However, Citi analyst Owen Jones has estimated the deal would give rise to €300m to €360m in savings. "It is difficult to envisage a deal from an interloper being able to offer such a high level of cost synergies," he says.
