Euronext purchases Borsa Italiana for €4.3bn
The pan-European stock exchange Euronext will pay €4.32bn in cash at closing for the full acquisition of the Milan stock exchange group Borsa Italiana from the London Stock Exchange. The financing combines use of existing cash of around €300m, €1.8bn of new debt issued and €2.4bn of new equity issued encompassing a private placement of €0.7bn to CDP Equity and Intesa Sanpaolo, which were associated to Euronext's bid, and a rights offer to Euronext’s existing shareholders (including CDP Equity and Intesa Sanpaolo).
The Italian public savings company CDP, which is the parent company of CDP Equity, will hence acquire a 7.3% stake in Euronext and have a representative on the group's supervisory board. Intesa Sanpaolo will hold a 1.3% stake after the private placement. In addition, an Italian candidate will also be proposed as an independent member of the supervisory board and will become the chair of the combined group.
In terms of numbers, the combination of Borsa Italiana and Euronext - forming the number one market infrastructure in Europe through the deal - will see 1,800 companies listed for an aggregate €4.4trn market capitalisation and around €11.7bn in daily equity trading. In addition, the groups also raised together over €42bn from investors to finance European companies last year.
Euronext said the transaction will be immediately accretive on adjusted EPS before synergies whilst it is expected to deliver double digit accretion in year 3. The group expects to deliver pre-tax run-rate synergies of €60 million per annum by year 3. It estimated restructuring costs will amount to €100m.
Direct regulatory oversight of the Borsa Italiana Group by Consob and Banca d’Italia will remain unchanged. The Italian CEO of the Borsa Italiana Group will join the managing board of Euronext. The CEO of MTS will join the extended Managing Board with group-wide responsibilities for fixed income trading. It is understood key businesses and some central functions of the combined group will be based in Milan and Rome while the group's leadership finance function will be located in Milan.
Stéphane Boujnah, CEO and Chairman of the Managing Board of Euronext said: “The acquisition of the Borsa Italiana Group marks a significant achievement in Euronext’s ‘Let’s Grow Together 2022’ strategic plan and a turning point in our Group’s history. Thanks to this transaction, Euronext will significantly diversify its revenue mix and its geographical footprint by welcoming the market infrastructure of Italy, a G7 country and the third largest economy in Europe. The combination of Euronext and the Borsa Italiana Group, with the strategic support of long-term investors such as CDP, delivers the ambition of building the leading pan-European market infrastructure, connecting local economies to global capital markets. This transaction will enhance the position of the Borsa Italiana Group within continental European capital markets. The proposed combination will create the backbone of the capital markets union in Europe. The Borsa Italiana Group will preserve its identity and integrity within Euronext’s federal model, while benefiting from enhanced governance, best-in-class offering and technology, to better serve the Italian capital markets.”