LSE sells €4.3bn Borsa Italiana to Euronext, banks

London Stock Exchange Group plc (LSEG) said on Friday it agreed to sell Borsa Italiana to Euronext NV and two Italian lenders for more than €4.33 billion in cash.

Euronext said it plans to issue €1.8 billion in debt and raise €2.4 billion in new equity to fund the transaction.

LSEG is selling Borsa Italiana to get approval from the European Union for its $27 billion purchase of data provider Refinitiv, which is 45% owned by Thomson Reuters.

LSEG put Borsa Italiana up for sale to address the European Commission’s concerns about its control over the European bond market.

The transaction represents a major expansion of the Euronext network of pan-European trading platforms.

Euronext already owns the main stock exchanges of Paris, Amsterdam, Dublin, Oslo, Lisbon and Brussels.

The addition of the Milan exchange will transform the reach of Euronext, giving it about a quarter of all equity trading in Europe — including listings for 28 of the Euro Stoxx 50 companies.

Borsa Italiana’s bond trading platform MTS will give Euronext its first move into fixed income trading.

MTS is the venue where most of Italy’s sovereign debt securities are traded.

To help with any political sensitivities, Euronext is bidding with Italian state-backed agency Cassa Depositi e Prestiti SpA and Intesa Sanpaolo SpA, Italy’s biggest bank. CDP will acquire a 7.3% stake in Euronext and Intesa about 1.3%.

Euronext said the proposed combination “will create a leading European market infrastructure in the European Union, whose central role to connect local economies to global markets is strengthened through the creation of the number one venue for listing and secondary markets for both debt and equity financing in Europe.”

The transaction will only take place if European authorities give the OK for the LSE-Refinitiv deal.

Euronext CEO and chairman Stéphane Boujnah said: “Thanks to this transaction, Euronext will significantly diversify its revenue mix and its geographical footprint by welcoming the market infrastructure of Italy, a G7 country and the third largest economy in Europe.

“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.

“This transaction will enhance the position of the Borsa Italiana Group within continental European capital markets.

“The Proposed Combination will create the backbone of the Capital Markets Union in Europe.”

LSEG CEO David Schwimmer said: “We continue to make good progress on the highly attractive Refinitiv transaction and we are pleased to have reached this important milestone.

“We believe the sale of the Borsa Italiana group will contribute significantly to addressing the EU’s competition concerns.

“The Borsa Italiana group has played an important part in LSEG’s history.

“We are confident that it will continue to develop successfully and contribute to the Italian economy and to European capital markets under Euronext’s ownership.”

Borsa Italiana S.p.A CEO Raffaele Jerusalmi said: “We have enjoyed a long and successful relationship with LSEG, which has invested in and developed our business over the last 12 years.

“We look forward to embarking on the next phase of our history, working in partnership with Euronext, CDP Equity and Intesa Sanpaolo to further develop our business and to contribute to the development of European capital markets.”