The board of directors of the London Stock Exchange Group (LON:LSE) released a statement on Wednesday morning stating that together with the management board of Deutsche Börse AG they have agreement upon terms of a recommended all-share merger of equals of LSEG and DBAG which will form a “Combined Group”.

The merger of the two exchanges will be executed through the creation of a new UK holding company known as “UK TopCo” which will acquire LSEG by way of a scheme of arrangement.

The London Stock Exchange Group will be acquired by UK TopCo and the Deutsche Börse will make a securities exchange offer to all shareholders of DBAG.

According to the terms of the agreement, LSEG Shareholders will be entitled to receive 0.4421 UK TopCo Shares in exchange for each LSEG Share and DBAG Shareholders will be entitled to receive one UK TopCo Share in exchange for each DBAG Share.

Providing there is 100% acceptance of the offer, the merger will mean LSEG shareholders will own 45.6% of UK TopCo and DBAG shareholders will hold 54.4%.

In the statement the groups said the merger would create a leading Europe-based global markets infrastructure group with a highly complementary combination of asset classes to improve growth for both companies whilst offering an enhanced product offering for customers.

Xavier Rolet, CEO of London Stock Exchange Group plc said:

“We are creating an industry-defining combination which will be a leading global market infrastructure business, very well positioned to create new benefits and efficiencies for our customers and increase value for our shareholders.”

Carsten Kengeter, the Chief Executive Officer of Deutsche Börse AG said the agreement would strengthen the link between the two leading European financial cities of Frankfurt and London whilst developing a network across Europe with Paris, Luxemburg and Milan which will allow European capital markets to become stronger and become a strong global player.

It was stated in the announcement that the merger will be conditional of whether the DBAG offer receives acceptance of over 75%. Providing the deal receives acceptance it is expected to be complete towards the end of 2016 or by the first quarter of 2017.