LSE nears RM22.5b Borsa Italiana sale to Euronext, Italian Banks

Borsa Italiana is seen as a strategic asset in Italy because of its ownership of MTS, a platform used to trade govt bonds

MILAN • London Stock Exchange Group plc (LSE) is nearing the sale of Borsa Italiana to Euronext NV and two Italian institutions for about €4.5 billion (RM22.5 billion) including debt, according to people familiar with the transaction.

LSE, which is selling Borsa Italiana to get approval for its US$27 billion (RM112.05 billion) Refinitiv deal, may announce the sale as early as today, said the people, who asked not to be named as the matter is confidential. LSE and Euronext declined to comment.

Adding Borsa Italiana would give Euronext about a quarter of all equity trading in Europe and mean that 28 of the Euro Stoxx 50 companies are listed on its markets.

LSE reversed earlier losses to trade up 0.3% in London at 11:27am local time yesterday, giving the company a market value of £31.3 billion (RM169.02 billion).

Borsa Italiana is seen as a strategic asset in Italy because of its ownership of MTS SpA, 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 SpA (CDP), a state-backed lender, and Intesa Sanpaolo SpA, Italy’s biggest bank. Those institutions would take stakes in Euronext.

The potential transaction would be financed through a mix of available cash, new debt and new equity in the form of a reserved capital increase to CDP and Intesa Sanpaolo and a rights issue to Euronext’s shareholders.

Originating in a merger between the Paris and Amsterdam exchanges, Euronext has grown under acquisitive CEO Stephane Boujnah’s federal model to absorb equity markets in six countries amid a wave of exchange consolidation globally.

The CEO said in an interview last month that owning Borsa Italiana would mean Euronext would get more than a third of its revenue in Italy, surpassing France. The deal gives the company a clearinghouse for the first time as well as a securities depository, stock exchange (SE) and bond platform.

Italy’s state lender CDP would own about 8% of Euronext, while Intesa Sanpaolo would own a stake similar to BNP Paribas SA’s 2% holding, the CEO said.

Boujnah has eyed a transformational tie-up in recent years. He missed out on Spanish exchange BME earlier this year, losing to SIX. This time he’s beaten both the Swiss firm and Deutsche Boerse. The German exchange operator said in a statement that its offer focused on a “high degree of autonomy” for the Italian SE, rather than the involvement of Italian partners at a group level. — Bloomberg