Euronext’s €4.3bn acquisition of Borsa Italiana

By Lucy Chen, Jessica Tang (University of Melbourne) and Demi Akinjide, Saihejpal Ailwadhi, Zac Greenberg, Will Sergent, Ben Fobel (University of Bristol)


Overview of the deal

Acquirer: Euronext NV

Target: Borsa Italiana Group (London Stock Exchange Group Holdings Italia)

Seller: London Stock Exchange Group

Total Transaction Size: €4.325 Billion

Announcement Date: October 9, 2020

Expected Close Date: H1 2021

Acquirer Advisors: JP Morgan, Mediobanca

Seller advisors: Goldman Sachs, Morgan Stanley, Barclays, Robey Warshaw

London Stock Exchange Group has agreed to sell Borsa Italiana to a consortium of buyers led by pan-European exchange operator Euronext, in an all-cash transaction. Euronext has partnered with state-owned Italian lender Cassa Depositi e Prestiti Equity and Italy’s biggest bank Intesa Sanpaolo in its bid for Italy’s only stock exchange, beating rival bids from Germany’s Deutsche Börse and Switzerland’s SIX Group.

Under the agreement, LSE will sell its entire shareholding in the owner of Borsa Italiana for a cash consideration of €4.325 billion, plus an additional amount reflecting cash generation until completion. The deal values Borsa Italiana at an enterprise valuation multiple of 16.7x 2019 adjusted EBITDA before synergies, compared to the 15.5x average for recent market infrastructure M&A. Euronext will finance the deal through €1.8 billion of new debt and a €2.4 billion capital raise, including a rights issue for existing shareholders and new equity from CDP and Intesa Sanpaolo.

The deal will create a leading player in continental European capital markets, transforming Euronext into the largest venue for listings and share trading in the EU. It is expected to be immediately accretive to Euronext’s adjusted earnings per share before synergies and generate a total of €60 million pre-tax run-rate synergies by year 3.

The sale of Borsa Italiana is part of LSE’s efforts to overcome antitrust concerns and gain regulatory approval from the European Commission for its $27 billion acquisition of data-provider Refinitiv, announced in August 2019. The deal, therefore, remains conditional upon, among other things, the divestment being a condition of any clearance decision for the Refinitiv transaction.

“The combination of Euronext and the Borsa Italiana Group, with the strategic support of long-term investors such as CDP, delivers the ambition of building the leading pan-European market infrastructure, connecting local economies to global capital markets.” - Euronext CEO Stéphane Boujnah

Company Details: Acquirer – Euronext

Euronext NV is Europe’s largest stock exchange and the sixth-largest in the world, encompassing 1,463 listed companies. After a variety of takeovers, such as the acquisition of the Portuguese stock exchange, Euronext has expanded its portfolio to include equities, bonds, and exchange-traded funds. It currently operates regulated exchanges in Belgium, France, Ireland, The Netherlands, Norway, and Portugal.

Founded in 2000, headquartered in Amsterdam, Netherlands