Euronext NV is set to acquire Borsa Italiana from the London bourse for $5.1 billion in cash, in a deal that will form the biggest stock listing venue in Europe, the companies announced on Friday.
The London Stock Exchange Group, which is selling Borsa to win approval from the European Union for its $27 billion Refinitiv contract, disclosed the deal after advanced discussions unfurled in September between the two groups.
Refinitiv - well known among brokers and investors for its informative trading screens - is 45 percent controlled by Thomson Reuters, the mother company of Reuters News. The consolidation is expected to grow into a fast-evolving niche, and make it the most powerful trading technology business in the world.
LSEG has decided to let go of Borsa Italiana to convince European regulators that its acquisition of Refinitiv shouldn't be obstructed on competition worries. SIX, the Swiss stock exchange, and Germany's Deutsche Boerse were also said to be interested in taking over the Italian groups.
The European Commission has notified the London Stock Exchange that it would only give the green light for the Refinitiv deal if all or a portion of Borsa is sold. LSE said it expects to finalize the deal with Refinitiv around the end of 2020 or early next year - before the confirmation of the Borsa sale, which the bourse estimates to be completed around June 2021.
The LSEG will dispose of its entire shareholding for around 4.3 billion euros in cash in addition to an unstated amount in view of the unit's performance through to the merger's completion. Shares of Euronext were down 3.5 percent during pre-market session and LSEG shares slightly inched up 0.7 percent. Bloomberg News first reported the transaction on Thursday.
For Euronext, which manages exchanges Dublin, Amsterdam, and Paris, the contract will boost its equity businesses, with the merged entity operating exchanges comprising of over 1,800 listed firms and a total market value of roughly 4.4 trillion euros.
Meanwhile, the CEO of FTSE 100 company David Schwimmer contended that the essence of the EU's concerns with regard to trade competition has been addressed. "We continue to make good progress on the highly attractive Refinitiv deal and we're glad to have achieved this important milestone," The Telegraph quoted Schwimmer as saying.
Borsa CEO Raffaele Jerusalmi said they look forward to working in tandem with Euronext, CDP Equity, and Intesa Sanpaolo to further enhance their business and contribute to the growth of capital markets in Europe.
