London Stock Exchange shareholders approved a proposed merger with Deutsche Boerse on Monday, but German financial officials said they believed the deal could not proceed with a non-EU London as the headquarters of the combined exchange.

Valued at an estimated 20 billion pounds (27 billion dollars), the merger paves the way to bring Britain's FTSE 100, Germany's DAX and the Euro Stoxx 50 index under one roof.

The shareholders approved it by 99.89 per cent of single votes and 99.92 per cent of votes by share value, comfortably passing the required minimum of 75 per cent of shares by value.

The deal remains subject to approval by regulators and by Deutsche Boerse shareholders, amid continued speculation that it could be hit by Britain's recent vote to leave the European Union.

"In light of the developments following the UK referendum, the parties emphasize that the agreed transaction includes all necessary mechanisms to respond to the outcome of the referendum," the London Stock Exchange Group said following Monday's vote.

A joint "referendum committee" will make recommendations to ensure the merged company will "meet all regulatory requirements to secure closing of the transaction and achieve its commercial objectives," the LSE Group said in a statement.

"I strongly endorse the statement of London Stock Exchange Group following their general meeting today and continue to recommend the transaction to the shareholders of Deutsche Boerse," Joachim Faber, chairman of the German company, said in the statement.

The merged trading behemoth would rival the largest stock exchange groups in the world, including CME Group and the Hong Kong Stock Exchanges and Clearing.

But Felix Hufeld, who heads Germany's financial watchdog, the Federal Financial Supervisory Authority, said it was "hard to imagine that the eurozone's most important stock exchange could be controlled from a location outside the EU."

Union representatives at Deutsche Boerse, which operates the Frankfurt Stock Exchange, also rejected the plan for the combined bourse to be based in London.

"The headquarters has to be in Frankfurt," said Jutta Stuhlfauth, who chairs the Deutsche Boerse's so-called works council of labour unions.

Given Britain's expected exit from the EU it would "paradoxical if the head office would be relocated to London," Stuhlfauth said.

Tarek Al-Wazir, the economics minister of the western German state of Hesse, where the Frankfurt bourse is based, said the Brexit vote would be a factor in his department's examination of the merger plan.

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