£21bn merger of LSE and Deutsche Borse understood to have collapsed
The £21 billion mega-merger between London Stock Exchange Group and Germany's Deutsche Borse is understood to be effectively dead after LSE refused to bow to EU competition concerns.
The Press Association has learned that the tie-up's collapse could be confirmed at the beginning of April, when the European Commission is due to rule on the takeover.
The news comes following LSE's decision on Sunday to reject the commission's request to offload its 60% stake in the Italian trading platform MTS.
The deal's collapse would fuel speculation of a takeover approach from a rival US suitor following sterling's 17% slump versus the US dollar and 10% drop against the euro since the Brexit vote.
Chicago Mercantile Exchange threatened to gatecrash the LSE Deutsche Borse tie-up last year, while t he New York Stock Exchange - the Intercontinental Exchange (ICE) - announced in March 2016 that it was preparing a possible counter-offer before pulling back on an official approach.
Formal talks with rival suitors are unlikely to begin until the break-up of the LSE Deutsche Borse deal is officially confirmed.
However, the LSE said on Sunday that it would continue to pursue the merger, with the commission set to rule on the deal before April 3.
Neil Wilson, senior market analyst at ETX Capital, said: "The merger with Deutsche Borse is on a knife edge.
"The regulatory hurdles were always a risk and with Brexit there are additional hurdles to clear that seem close to insurmountable now."
Shares in LSE were down more than 3% on the FTSE 100 Index after the stock exchange said that , with its shareholders' best interests in mind, it could not go ahead with the commission's request.
In a statement on Sunday, the LSE said: "Based on the commission's current position, LSE believes that the commission is unlikely to provide clearance for the merger.
"Nevertheless, the LSE board remains convinced of the strategic benefits of the merger and recognises the strong support from shareholders for the transaction.
"LSE will continue to take steps to seek to implement the merger."
The MTS is an electronic trading platform for European wholesale government bonds, particularly in Italy.
The commission's requests are the latest obstacles standing in the way of the tie-up after it was revealed earlier this month that the boss of Deutsche Borse would face a probe into alleged insider dealing.
Carsten Kengeter is under investigation by German prosecutors into a share transaction made in December, but he continues to receive backing from Deutsche Borse's supervisory board .
The mega-merger has also faced pressures from Britain's vote to leave the European Union, despite attempts by both firms to assuage fears that the referendum result would not scupper the deal.
Thomas Schaefer, the German finance minister of the state of Hesse, had called for their combined headquarters to be based in Frankfurt rather than the UK in light of Brexit.
However, the terms of the deal tie-up said London would be the entity's home.
The London Stock Exchange had proposed to offload its French clearing business LCH to Euronext for 510 million euro (£434 million) to smooth the passage of the deal.
At a regular press briefing in Brussels, European Commission spokesman Ricardo Cardoso said: "It is a point of principle that we simply do not comment on ongoing merger investigations.
"Our assessment is ongoing, the deadline remains the same, it is still April 3, we have not taken any decision."