London Stock Exchange Group agreed to sell Borsa Italiana to Euronext and two Italian lenders for more than €4.33 billion ($5.1bn), in a deal that will create the largest listing venue in Europe.
LSE, which is selling Borsa Italiana to get approval from the European Union for its $27bn Refinitiv deal, announced the transaction in a statement on Friday after exclusive talks between the parties started last month.
The London exchange will sell its entire shareholding for €4.3bn in cash plus an additional amount reflecting cash generation through to the deal’s completion.
The addition of the Milan bourse would mean Euronext will handle a quarter of all equity trading in Europe and 28 of the Euro Stoxx 50 companies will be listed on its markets. The deal gives Euronext a clearinghouse for the first time as well as a securities depository, stock exchange and bond platform.
Euronext and LSE shares were little changed in early trading. The deal depends on European authorities giving the green light to LSE’s Refinitiv deal.
“We believe the sale of the Borsa Italiana group will contribute significantly to addressing the EU’s competition concerns,” said David Schwimmer, LSE’s chief executive. The transaction is expected to close in the first half of next year.
Borsa Italiana is seen as a strategic asset in Italy because of its ownership of MTS, a platform used to trade government bonds, and the Italian government has sought to engineer a deal for months.
Euronext, the owner of the Paris and Amsterdam exchanges, is bidding with Cassa Depositi e Prestiti, a state-backed lender, and Intesa Sanpaolo, Italy’s biggest bank. CDP will acquire a 7.3 per cent stake and Intesa about 1.3 per cent in Euronext.
“The acquisition of Borsa Italiana is a turning point in the history of Euronext,” chief executive Stephane Boujnah said. “It marks the realisation of our ambition to build the leading pan-European market infrastructure and create the backbone of the European capital markets union.”
Euronext will finance the deal through €1.8bn of new debt and a €2.4bn capital raise, including a €700 million private placement with CDP and Intesa SanPaolo, and a rights offer to existing shareholders.
Italian institutions will also have the right to name the new chairman of Euronext. Their combined stake will be at the same level of French shareholders, Euronext’s chief executive said last month.
Euronext’s Mr Boujnah said synergies from the deal would mainly be extracted from moving Borsa Italiana to Euronext’s technology platform rather than through job cuts.
