The London Stock Exchange and its German counterpart, Deutsche Boerse, have agreed a deal which in effect corresponds to a takeover by the German company though it is being positioned as a 'merger.'

The non-cash deal will see shareholders in the London Exchange own 45.6% of the enlarged group, which will become the largest exchange operator in the world, valued at over $30bn.

The companies, both publicly-quoted in their own right, say the new group will achieve cost savings of €450m per year.

The deal, which is subject to regulatory and competition approval, follows two previously unsuccessful attempts by Deusche Boerse to acquire the London Exchange in 2000 and 2005.

The LSE also owns Milan-based Borsa Italiana.

A statement from the two exchanges said the "combination of London, Frankfurt and Milan will provide a platform for financing and promoting economic growth of European companies and be an attractive offering to Asian and US companies looking to access investors and capital."