Euronext, Europe’s largest stock exchange operator, will get even bigger after it agreed to purchase Borsa Italiana (the operator of the Milan Stock Exchange) from the London Stock Exchange, or LSE, for 4.3 billion euros ($5.1 billion).

The deal is complex and involves many stakeholders across the continent and U.K.

LSE entered into exclusive talks with Euronext last month on the deal after two other major European stock exchange operators — Germany’s Deutsche Boerse and Switzerland’s SIX — were muscled out of the picture.

LSE’s proposed disposition of Borsa Italiana is linked to its own plan to purchase data provider Refinitiv for $27 billion. LSE is still seeking regulatory approval from the EU for that transaction. (Refinitv is 55%-owned by Blackstone Group and 45%-owned by Thomson Reuters)

LSE’s acquisition of Refinitiv would transform LSE into a “capital markets infrastructure and information powerhouse, controlling widely-used services in share, bond and swaps trading as well as clearing, data and indices,” the Financial Times reported.

LSE put Borsa Italiana on the selling block after the European Commission’s competition watchdog raised concerns about LSE’s control over the European bond market.

LSE initially purchased Borsa Italiana in 2007 for 1.6 billion euros ($1.9 billion) – meaning it will make a huge profit on its sale to Euronext.

Upon gaining the Milan exchange, Euronext will operate exchanges with more than 1,800 listed companies and an aggregate market value of about 4.4 trillion euros ($5.2 trillion).

Borsa Italiana’s bond trading platform MTS will also allow Euronext to enter fixed income trading for the first time. MTS oversees the trading of Italy’s 2.1 trillion euro ($2.5 trillion) government bond market.

The deal will also sharply increase the amount of assets Euronext holds in custody on behalf of banks — from 2.2 trillion euros ($2.6 trillion) to 5.6 trillion



REUTERS/Toby Melville


© REUTERS/Toby Melville
REUTERS/Toby Melville

  • The London Stock Exchange agreed to sell Italy’s only stock market platform to Paris-headquartered Euronext for about $5 billion.
  • LSE said it opted to divest the Milan stock exchange to fulfill a condition for its acquisition of  data-provider Refinitiv, which is currently under review by the European Union’s executive arm.
  • The deal is politically sensitive, as the Italian government was debating whether to take back full control of Borsa Italiana earlier this year.
  • Euronext has partnered with Italy’s largest bank and state agency CDP to secure the Italian government’s backing.
  • Visit Business Insider’s homepage for more stories.

The London Stock Exchange agreed on Friday to sell Milan’s Borsa Italiana to pan-European stock operator Euronext for 4.3 billion euros ($5 billion).  

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The LSE said it began discussions with Paris-based Euronext last month and a share purchase agreement was signed on October 9.

The sale depends on LSE’s prospective $27 billion acquisition of data provider Refinitiv, the terms of which are under investigation by the European Commission. 

LSE said it opted to divest the Italian stock exchange to persuade the EU regulator to approve its takeover of Refinitiv.

“We believe the sale of the Borsa Italiana group will contribute significantly to addressing the EU’s competition concerns,” LSE CEO David Schwimmer said in a statement, adding that the exchange is making “good progress” on the Refinitiv deal.

The Refinitiv transaction is expected to be completed by early next year, while the Borsa Italiana deal is set to clear in the first half of 2021. 

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Euronext, valued at about 7 billion

LONDON (Reuters) – London Stock Exchange

said on Friday it had accepted a 4.325 billion euro ($5.09 billion) cash offer by pan-European bourse operator Euronext

for the Milan stock exchange.

LSE entered exclusive talks with Euronext last month after the Paris bourse owner saw off competition from Deutsche Boerse

and Swiss rival SIX for Borsa Italiana.

LSE is selling Borsa as part of regulatory remedies to see through its $27 billion purchase of data provider Refinitiv, which is 45% owned by Thomson Reuters
, the parent company of Reuters News.

The sale is contingent on the European Commission formally stating it will only approve the Refinitiv deal if all or part of Borsa Italiana is sold.

“We believe the sale of the Borsa Italiana group will contribute significantly to addressing the EU’s competition concerns,” LSE Chief Executive David Schwimmer said in a statement.

The sale of Borsa is politically sensitive in Italy due to Borsa’s ownership of MTS, the bond platform which handles trading of Italy’s 2.1 trillion euro ($2.5 trillion) government bonds.

To secure the backing of the Rome government, Euronext has teamed up with state agency Cassa Depositi e Prestiti (CDP) and Italy’s biggest bank Intesa SanPaolo

.

(Reporting by Rachel Armstrong; editing by Simon Jessop)

Copyright 2020 Thomson Reuters.

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