The London Stock Exchange said Tuesday it has agreed to offload the French arm of clearing house LCH to European rival Euronext as it seeks a merger with Deutsche Boerse.

LSE Group said a cash deal worth 510 million euros ($534 million) had been struck with Euronext, adding in a statement that the proposed sale "would be subject to review and approval by the European Commission in connection with the recommended merger of LSEG and Deutsche Boerse".

LSE, which operates also the Milan stock exchange, had proposed the sale of the French division as an attempt to address EU competitions over a tie-up with the Frankfurt stock exchange.

Deep concerns over competition helped scupper two earlier attempts by the companies to merge, in 2000 and 2005.

Clearing houses are meanwhile an increasingly vital part of financial markets, insuring buyers and sellers against their counterparts pulling out of a deal in exchange for cash guarantees.

London hosts roughly 1.3 trillion euros of euro clearing transactions every year, a status that is now in danger with the British vote to leave the EU.

The LSE and Deutsche Boerse merger would create a financial markets behemoth competing with the likes of the Chicago exchange and ICE in the United States, as well as the Hong Kong stock exchange in Asia.

The planned merger, which has hit turbulence after last year's shock decision by Britain to quit the European Union, would ring up one of the globe's biggest groups for stock listings and market data, tying the Frankfurt-dominated eurozone to a post-Brexit London.

The proposed deal has drawn sharp rebukes from France, Belgium, Portugal and the Netherlands, fearful for their own stock exchanges, owned by Euronext.

Deutsche Boerse operates the Frankfurt exchange, as well as the Luxembourg-based clearing house Clearstream and the derivatives platform Eurex.

Source: AFP