Euronext’s €625 million ‘in-the-balance’ bid for Oslo Bors

By Harvey George, Surya Kongara, Ikjyot Anand and Karthik Neelamegam (LSE) - Date: 02/02/2019

Overview of the deal

  • Acquirer: Euronext N.V.

  • Target: Oslo Bors VPS Holding ASA

  • Estimated value: €625 mn

  • Announcement date: 14th January 2019

  • Acquirer Advisor: -

  • Target Advisor: Arctic Securities

Before launching their €625 mn bid for the company, Euronext held a 5.3% stake in Oslo Bors. Now, after, they have agreements to purchase 50% of outstanding shares at NKR 145 (~€14.8) per share which represents a healthy 32% premium. The cash tender offer (offering to buy shares directly from shareholders) values the Norwegian-based exchange at €625mn. To entice shareholders to pledge their shares to Euronext, the company is also offering a 6% interest rate between acceptance and deal closure to try and close the deal as quickly as possible by getting early deal acceptance.

Caught in surprise by the tender offer, Oslo Bors’ board of directors have urged its shareholders to wait for its recommendation by late February, which Norwegian bank DNB and insurance company KLP, who represent 30% of share holdings, have said they will follow. A higher bid has actually come (30th Jan) from Nasdaq, the large exchange operator, which values the company at €677 mn, but it is unclear what will happen to ownership as Euronext have stated that the commitments of shareholders to tender their holdings are irrevocable.

With €650mn to spend on acquisitions from existing cash and potential debt capacity, and with total capacity to spend around €1bn, Euronext aims to continue their strategy of bolt-on acquisitions to diversify revenue away from shares and derivatives trading. However, Euronext has found it difficult to grow externally (i.e purchase exchanges) as many market operators already belong to London Stock Exchange Group, Nasdaq Inc. or their shareholders wish to remain independent. Although Stephane Boujnah, Euronext’s CEO, aims to grow the company in the medium-term, he has said that the company will shy away from paying expensive multiples.

“It is crucial for us to have a complete picture of how a potential new owner will contribute in developing Oslo Stock Exchange as a suitable market place for Norwegian companies, both large, medium and small." - Insurance Company KLP

Company details (Euronext)

Euronext is a pan-European stock exchange operator with markets in Belgium, France, the Netherlands, Portugal and the UK. They offer cash and derivatives markets in addition to equities and ETF platforms.

- Founded in 2000, headquarters: Amsterdam, Netherlands

- President and CEO: Stéphane Boujnah

- Number of employees: 671

- Market Cap: €3.57bn EV: €3.77bn

- LTM Revenue: €595mn LTM EBITDA: € 333mn

- LTM EV/Revenue: 6.3x LTM EV/EBITDA: 11.3x

Company details (Oslo Bors)

Oslo Bors VPS Holding operates the Oslo Stock Exchange, the only independent stock exchange within the Nordic countries and offering Norway’s sole regulated market for securities trading. Oslo Bors is dominant in seafood derivatives and has significant expertise in oil services and shipping.

- Founded in 2001, headquarters: Oslo, Norway

- President and CEO: Bente Landsnes

- Number of employees: 244

- Market Cap: €652mn EV: €599mn

- LTM Revenue: €111mn LTM EBITDA: €51mn

- LTM EV/Revenue: 5.4x LTM EV/EBITDA: 11.8x

Projections and Assumptions