Acquisition of the Milan Stock Exchange by Euronext

  •   12/10/2020 - 17h22
  •   HARMANT Adeline

The ad came down last weekend. Euronext has indeed reached an agreement to buy the Milan Stock Exchange for 4.3 billion euros and thus create a new entity that will represent approximately 4,400 billion euros in market capitalization.

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Acquisition of the Milan Stock Exchange by Euronext

A historic operation :

The Euronext group is therefore preparing to implement a historic operation by buying Bolsa Italiana from the London Stock Exchange or LSE for 4.325 billion euros. Thanks to the acquisition of this new financial centre, Euronext will therefore have a heavy weight on the international market and will become a first-rate infrastructure in the European Union as the most important in terms of funds raised by companies on all markets.

This will also enable Euronext to diversify its business portfolio with new asset classes and will strengthen its post-trade activities. The new entity thus represents a cumulative turnover of 1.3 billion euros for 2019, to which Bolsa Italiana contributes 34%. With 1,800 companies and a total capitalisation of 4,400 billion euros and daily trading of 11.7 billion euros, Euronext thus becomes the leading market place in Europe. By comparison, the CAC 40 weighs only EUR 1,600 billion and currently trades between EUR 2 and 3 billion a day.

Thanks to this transaction, the group should therefore achieve a quarter of the equity trading flows in Europe, as its CEO explained this weekend.

 

Euronext also becomes the leader in government bonds:

Thanks to this integration of the Milan Stock Exchange and its bond trading platform, which is 62.53% owned by the latter, the Euronext group will also become the leader in the sovereign bond market in Europe. It acquires CC&G, which is intended to combine its clearing house activities, and Monte Titoli, which doubles the size of Euronext as a central depository.

Euronext shareholders should also benefit from the advantages of this transaction, notably through earnings per share, for which it will be accretive from the first year and will thus allow a significant increase in EPS in just three years. Euronext anticipates cost synergies of €45 million before tax and revenue synergies of €15 million or €60 million per year from the third year onwards with initial expenses estimated at €100 million.

The purchase of this financial place will be paid entirely in cash with a bridging loan already granted by a banking pool and pending a fund raising of 2.4 billion including a private placement with Cassa Depositi and Prestiti, the Italian depository bank, and via its subsidiary CDP Equity, and with Intesa Sanpaolo, which will therefore become Euronext's reference shareholders. An operation will then be open to all shareholders.