Euronext in exclusive talks with LSE for Borsa Italiana acquisition

On the 09/18/20 at 9:42AM


Adrien Paredes-Vanheule

The pan-European stock exchange operator Euronext and CDP Equity (CDPE), a subsidiary of Italian public savings scheme Cassa Depositi e Prestiti, have entered into exclusive talks with the London Stock Exchange Group for the purchase of the Milan market exchange, Borsa Italiana. The amount of the transaction has not been disclosed. Euronext had confirmed earlier this week that it submiitted a joint offering with Cassa Depositi e Prestiti and Italian bank Intesa Sanpaolo for Borsa Italiana. Deutsche Börse and SIX are also candidates to the acquisition of Borsa Italiana from LSE.

Under the terms of the offer, CDPE and Intesa would become shareholders of Euronext through a reserved capital increase. The potential transaction would be financed through a mix of existing available cash, new debt and new equity via the reserved capital increase to CDPE and Intesa Sanpaolo and a rights issue to Euronext's shareholders. CDPE would acquire a stake aligned with these of other largest reference shareholders of Euronext and would have two representatives on the supervisory board of Euronext, one becoming chairman of the combined group.

"Borsa Italiana would maintain its current functions, structure and relationships within the Italian ecosystem and preserve its Italian identity and strengths. The Italian CEO of Borsa Italiana would join the Managing Board of Euronext. The CEO of MTS would join the extended Managing Board, alongside the other key leaders of large business units and key central functions of Euronext, with group-wide responsibilities for fixed income trading," said Euronext in a press release.

The group added that key businesses and central functions of the new group would be based in Milan - where the leadership of group finance function will be located - and Rome. MTS is expected become the group's European "center of excellence for fixed income trading" while Cassa di Compensazione e Garanzia ('CC&G') would become the clearing house within the combined entity and a key pillar of the enlarged Euronext's post-trade strategy. As for Monte Titoli, the Italian Central Securities Depository, it would become the largest CSD within the Euronext group.

Italy, through Borsa Italiana, would become the largest revenue contributor to the enlarged Euronext group, said the pan-European stock exchange operator which already operates stock exchanges in Belgium, France, Ireland, The Netherlands, Norway and Portugal.