London Stock Exchange in talks to sell Borsa Italiana
The London Stock Exchange Group (LSEG) has announced it is in exclusive talks with Euronext over the sale of its Italian business.
LSEG is seeking to offload Borsa Italiana to convince the European Commission not to block its $27bn (£20.8bn) takeover of data provider Refinitiv over competition concerns.
The exchange said Euronext had emerged as the frontrunner after it received "a number of competitive proposals from several parties".
The announcement is a blow to Deutsche Boerse, which confirmed last week that it was interested in buying Borsa Italiana.
Swiss stock exchange operator SIX was also reported to be among the potential acquirers of the owner of Milan’s stock exchange.
The terms of Euronext’s bid were not disclosed but the Borsa Italiana Group as a whole is estimated to be valued at between €3.5bn (£3.2bn) and €4bn.
As well as the Milan stock exchange, Borsa Italiana’s prized assets include MTS, one of Europe’s main bond trading platforms with average daily trading volumes of more than €100bn.
MTS is sought-after but is politically sensitive because of its importance for European governments raising money by issuing bonds. Italy's €2.6 trillion of government debt is handled through the platform.
LSEG said it had received offers for both MTS and for the Borsa Italiana Group as a whole.
Euronext has teamed up with Italian banks Cassa Depositi e Prestiti (CDP) and Intesa Sanpaolo for its bid and said that if the transaction went ahead, there would be two Italian members on its supervisory board, including the chairman.
It plans to finance a deal through a combination of existing cash, new debt and a rights issue to existing shareholders. CDP and Intesa Sanpaolo would also be handed shares in Euronext.
The deal, if it goes through, will add another exchange to Euronext’s growing portfolio, which includes the Paris, Amsterdam and Dublin bourses.
Euronext said: "Key businesses and central functions of the new group would be based in Milan and Rome."
Analysts at Jefferies, the investment bank, said there was a "compelling industrial logic" for Euronext to acquire the Italian bourse, which would provide it with "much needed scale" and boost its clearing and electronic bond trading capabilities.
Any deal is conditional on the Commission clearing the Refinitiv deal, LSEG indicated.
Shares in Euronext were up 4.9pc on Friday afternoon while shares in LSEG were 0.8pc higher.
