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Euronext To Buy Borsa Italiana From LSEG In €4.33 Bln Deal; Stock Down

lsegeuronextborsaitaliana oct09 lt

Shares of Euronext NV (ENXB.BE,ENX.BR,ENX.AS,ENX.PA) were losing around 6 percent in Paris trading after the company announced its agreement to acquire London Stock Exchange Group Holdings Italia S.p.A., the holding company of the Borsa Italiana Group, from London Stock Exchange Group plc (LSE.L) for a cash consideration of 4.325 billion euros.

The transaction is expected to be accretive to the adjusted earnings per share immediately. The deal would generate a total of 60 million euros pre-tax run-rate synergies by year 3, and would be double digit accretive in year 3 after synergies.

Euronext's Managing Board and the Supervisory Board have unanimously approved the transaction. The completion of the proposed combination is expected in the first half of 2021.

The potential transaction is conditional upon, amongst other things, the divestment of the Borsa Italiana Group or a material part thereof being a condition of the European Commission's clearance decision for LSEG's proposed acquisition of US-based Refinitiv.

In its statement, LSEG said it plans to use the net proceeds from the deal to repay indebtedness related to the Refinitiv transaction and for general corporate purposes. It was in August 2019 that the LSEG agreed to acquire Refinitiv in an all share transaction for a total enterprise value of about $27 billion.

Following the acquisition, Borsa Italiana will join the Euronext single order book. It will maintain its current functions, structure and relationships within the Italian ecosystem and preserve its Italian identity and strengths. The Italian CEO of the Borsa Italiana Group will join the Managing Board of Euronext.

Euronext expects the proposed combination to create a major European market infrastructure in the European Union. It will be a major listing venue in Europe with more than 1,800 companies listed and 4.4 trillion euros aggregate market capitalization of listed companies.

As of August 31, 2020, 370 companies were listed on Borsa Italiana, with a total domestic market capitalisation of 545 billion euros. Borsa Italiana Group generated 478 million euros in revenue and 278 million euros in EBITDA for the last twelve months period ended June 30, 2020.

Euronext expects Italy to be the largest revenue contributor to the combined group with 34 percent of the total 2019 combined revenue.

Stéphane Boujnah, CEO and Chairman of Euronext said, "The acquisition of the Borsa Italiana Group marks a significant achievement in Euronext's 'Let's Grow Together 2022' strategic plan and a turning point in our Group's history. Thanks to this transaction, Euronext will significantly diversify its revenue mix and its geographical footprint by welcoming the market infrastructure of Italy, a G7 country and the third largest economy in Europe."

In Paris, Euronext shares were trading at 96.45 euros, down 5.90 percent.

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