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