Euronext, the pan-European market infrastructure group, has beaten its competitors to enter exclusive talks with the London Stock Exchange Group (LSEG) to acquire Borsa Italiana.
To secure the G7 country’s only exchange, Euronext has partnered with CDP Equity, a sovereign wealth fund formerly known as Fondo Strategico Italiano, and Intesa Sanpaolo, an Italian banking group,
Euronext said its combination with Borsa Italiana would create a key market player in continental European capital markets, where Italy would be the largest revenue contributor to the enlarged Euronext group.
If a deal is reached, CDP Equity and Intesa Sanpaolo would join the existing group of Euronext’s long-term reference shareholders.
Borsa Italiana would maintain its current functions, structure and relationships within the Italian ecosystem and preserve its Italian identity and strengths, Euronext confirmed.
The Italian CEO of Borsa Italiana would join the managing board of Euronext.
Key businesses and central functions of the new group would be based in Milan and Rome. In particular, MTS, which operates interdealer, dealer-to-client and repo markets, would become the group’s European Center of Excellence for fixed income trading.
Cassa di Compensazione e Garanzia would be the clearinghouse within the combined entity and would become a key pillar of the enlarged Euronext’s post-trade strategy.
In addition, Monte Titoli the Italian Central Securities Depository (CSD), offering issuance, settlement and custody services would become the largest CSD within the Euronext group, becoming a key contributor to Euronext’s CSDs ambition.
To secure rights to exclusive talks with LSEG for the Italian exchange, Euronext and its partners had to ward off counter-offers by others including Deutsche Boerse on 4 September.
A spokesperson for the German exchange said: “As a global company and leading stock exchange in Europe, we could have created substantial value for Borsa Italiana through future growth and expansion of the Italian and European capital markets."
“Deutsche Boerse's offer focused on strategic synergies and a high degree of autonomy for the Italian stock exchange, rather than the involvement of Italian partners on Deutsche Boerse Group level.”
The bid of Borsa Italiana comes as part of Euronext's ambitious growth strategy to form a community of European exchanges and financial infrastructures under its roof, which also led to the acquisition of VP Securities, the Danish central securities depository, earlier this year.
Euronext was able to ink a deal for the Dublin stock exchange in 2018 and attempted to also acquire Spain’s Bolsas y Mercados Espanoles a year later but lost out to SIX.
However, as a G7 exchange, Borsa Italiana represents the biggest prize for Euronext in recent years and a vital piece of the puzzle for Euronext’s plans for the future.
