Euronext enters into exclusive talks for LSEG’s Borsa Italiana

Euronext moves forward with Borsa Italiana talks after bids from fellow exchange operators Deutsche Börse and SIX.

European exchange group Euronext has entered into exclusive talks with the London Stock Exchange Group (LSEG) to acquire Borsa Italiana, together with Italian banking group Intesa Sanpaolo.

If the discussions do lead to a transaction, CDP Equity – owned by sovereign wealth fund Cassa Depositi e Prestiti – and Intesa Sanpaolo would join the existing Euronext long-term Reference Shareholders through the subscription of a reserved capital increase, the exchange confirmed. CDP would have an 8% stake under the agreement.

“The proposed combination of Borsa Italiana and Euronext would create a leading player in continental European capital markets,” said Euronext in a statement. “This transformational project would position the newly formed group to deliver the ambition of further building the backbone of the Capital Markets Union in Europe, while at the same time supporting local economies.”

A second Italian candidate will be proposed as an independent member of the board and chairman of the combined group, the exchange confirmed.

Euronext added that direct regulatory oversight of Borsa Italiana would remain unchanged allowing Consob and Banca d’Italia to continue directly supervising its activities.

The key businesses of Borsa Italiana would be based in Milan and Rome and the group’s finance leadership would be located in Milan. Should the deal go ahead, Italy would become the largest revenue contributor to the enlarged Euronext group.

Meanwhile, MTS would become the group’s European centre of excellence for fixed income trading, Cassa di Compensazione e Garanzia would be the clearing house within the combined entity, and Monte Titoli would become the largest CSD within the Euronext group.

At the same time that Euronext confirmed its bid for the Milan-based trading venue, Reuters revealed that Swiss exchange operator SIX Group had also submitted a non-binding offer, meanwhile Deutsche Börse also submitted a bid for the group.