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EURONEXT TO ACQUIRE THE BORSA ITALIANA GROUP AND CREATE THE LEADING PAN-EUROPEAN MARKET INFRASTRUCTURE
¨Acquisition1 of 100% of
¨
¨Strong support from Cassa Depositi e Prestiti (through CDP Equity5 (“CDPE”), 100%-owned) and Intesa Sanpaolo6 as strategic investors, with long-term commitment to support the growth of the
¨Creation of the leading player in European capital markets infrastructure, strengthening Euronext’s leadership in European cash equities, while adding significant capabilities in fixed income trading and increasing post trade activities with a fully-owned, multi-asset clearing house and a scale CSD
¨Widening of the product offering across the value chain and deepening of the liquidity pool to bring significant benefits for European capital markets and the Italian financial ecosystem
¨Financing of the transaction fully secured by a bridge loan financing and long-term financing to be implemented through a mix of (i) existing available cash, (ii) new debt and (iii) new equity in the form of a private placement to CDP Equity and Intesa Sanpaolo and a rights offer to Euronext’s shareholders
¨Transaction expected to be accretive to the adjusted EPS7 (before synergies) immediately, to generate a total of €60 million pre-tax run-rate synergies by year 3, and to be double digit accretive in year 3 after synergies
¨Convening of an Extraordinary General Meeting of Shareholders to approve the transaction on
The Managing Board and the Supervisory
The Reference Shareholders support the Proposed Combination and have each signed an irrevocable undertaking vote in favour of the resolutions tabled at the Extraordinary General Meeting.
The Proposed Combination will create a leading European market infrastructure in the
The potential transaction is conditional upon, amongst other things, the divestment of the
“The acquisition of the
The combined10 revenue for the
Strategic rationale
The Proposed Combination of the
- The #1 listing venue in
Europe with more than 1,800 companies listed and €4.4 trillion aggregate market capitalization of listed companies11; - The #1 venue for secondary markets in
Europe , with c.€11.7 billion worth of equities traded on a daily basis12; and - The #1 venue in equity financing, with more than €42 billion raised in 2019 from investors to finance companies across
Europe .
Euronext will achieve enhanced business diversification with new capabilities in fixed income trading and clearing, as well as consolidation of CSD businesses. With the addition of MTS, the
The Proposed Combination is expected to enhance Euronext and the Borsa Italiana Group’s businesses across all their segments. This complementarity is expected to lead to greater benefits for investors, issuers and shareholders, creating a more comprehensive offering, under a resilient business based on a strong core of services.
Financial impact and synergies potential
The Proposed Combination will provide compelling shareholder benefits. The transaction is expected to be immediately accretive on adjusted EPS14 before synergies and is expected to deliver double digit accretion including run-rate synergies in year 3.
Through the Proposed Combination, the
- Pre-tax run-rate cost synergies of €45 million, primarily driven by (i) migration of Borsa Italiana’s cash equity and derivatives markets to Optiq®, Euronext’s state-of-the-art proprietary trading platform, (ii) additional technology synergies from co-operation of CSD businesses and (iii) leveraging the
Combined Group capabilities, processes and systems. - Pre-tax run-rate revenue synergies of €15 million, driven by roll-out of Euronext’s single liquidity pool and single order book in
Italy , development of a pan-European offering in derivatives products, product cross-selling and business growth opportunities such as deployment of corporate services inItaly and identified opportunities to grow the span of market data and analytics offering.
Restructuring costs to deliver those synergies are expected to amount to €100 million.
Principal terms of the transaction and financing
The cash consideration to be paid to LSEG for the Proposed Combination will amount to €4,325 million15. The consideration will be paid in cash at closing. The financing is fully secured through a bridge loan facility underwritten by a group of banks (
The final financing of the Proposed Combination includes:
- ~€0.3 billion of use of existing cash;
- ~€1.8 billion of new debt to be issued;
- ~€2.4 billion of new equity to be issued, including (i) a private placement (~€0.7 billion16) to CDP Equity and Intesa Sanpaolo, two cornerstone Italian investors and (ii) a rights offer to Euronext’s existing shareholders (including CDP Equity and Intesa Sanpaolo)
Euronext is committed to maintaining an investment grade credit rating aligned with its robust financial structure, with pro forma net leverage17 estimated at 3.4x at
Governance, management and supervision
As a new major country in the Euronext federal model and as the largest revenue contributor,
CDP Equity and Intesa Sanpaolo will join the group of Euronext’s long-term Reference Shareholders through the subscription of a private placement, taking place in connection with the completion of the transaction, with CDPE acquiring a stake of c.7.3%, in line with stakes held by the largest Reference Shareholders of Euronext (post dilution of the private placement), and having a representative on the Supervisory
The presence of strategic investors with long term investment horizon such as CDP Equity and Intesa Sanpaolo, will further support the
As part of the transaction, CDP Equity and Intesa Sanpaolo intend to become long-term Reference Shareholders. As such, Euronext has been informed that its Reference Shareholders, CDP Equity and Intesa Sanpaolo will enter into an extension and amendment agreement in relation to the Reference Shareholders’ agreement before completion of the Proposed Combination. The Reference Shareholders (on completion of the Proposed Combination, including CDP Equity and Intesa Sanpaolo), acting jointly, will continue to have the right to propose one third of Euronext’s Supervisory Board seats, which will include a representative of CDP Equity. The amended Reference Shareholders’ agreement will provide for a three-year lock-up of certain of the Reference Shareholders’ ordinary shares in Euronext, subject to certain exceptions. More information on the amended Reference Shareholders’ agreement can be found in the shareholder circular available on www.euronext.com.
An Italian candidate will also be proposed as an independent member of the Supervisory Board and will become the Chair of the
Euronext will recommend that Commissione Nazionale per le Società e la Borsa (“CONSOB”) is invited to join Euronext’s
Key businesses and some central functions of the combined group will be based in
Extraordinary General Meeting
Euronext will convene an Extraordinary General Meeting to be held on
The Managing Board and the Supervisory
The Reference Shareholders support the Proposed Combination and have each signed an irrevocable undertaking vote in favour of the resolutions tabled at the extraordinary general meeting.
Expected timetable
Completion of the Proposed Combination will be subject to Euronext’s and LSEG’s shareholder approvals, regulatory approvals in
The completion of the Proposed Combination is expected in the first half of 2021.
Agenda
An analysts conference call and a webcast will be held on
The presentation is available on the website: www.euronext.com/investors
To connect to the conference call, please dial:
UK Number: +44 203 003 2666- FR Number: +33 1 70 37 71 66
- NL Number: +31 20 794 8426
- US Number: +1 212 999 6659
- BE Number: +32 2 792 0434
- PT Number: +351 3 0880 2081
- IR Number: +353 1 436 0959
- NO Number: +47 2 156 3318
Password: Euronext investor relations
Live Webcast:
A live audio webcast and replay after the call will be available via this link and on Euronext’s Investor Relations website.
The EGM convening notice, agenda and the shareholder circular are available on https://www.euronext.com/fr/investor-relations/shareholder-meetings
CONTACTS – EURONEXT
Media - mediateam@euronext.com
Analysts & investors – ir@euronext.com
Aurélie Cohen +33 1 70 48 24 17
Clément Kubiak +33 1 70 48 26 33
Media (
Auro Palomba auro.palomba@communitygroup.it
Roberto Patriarca +39 335 650 9568 ; roberto.patriarca@communitygroup.it
APPENDIX
Alternative Performance Measures (‘APM’)
APM used in this release are defined and should be read as follows:
- EBITDA as the operating profit before exceptional items and depreciation and amortisation
- EBITDA margin as the operating profit before exceptional items and depreciation and amortisation, divided by revenue.
EBITDA presented as part of this press release is in line with the definition presented in Chapter 5 of the Euronext 2019 Universal Registration Document.
Adjusted EPS used in this press release is defined as earnings per share adjusted for purchase price allocation, exceptional items and tax related to those items, based on a price per Ordinary Share of €102.50 as of
in €m, unaudited – from the Borsa Italiana Group Management accounts | 2017 | 2018 | 2019 | LTM |
Revenue | 436.1 | 446.9 | 463.7 | 477.9 |
Capital Markets | 193.1 | 202.6 | 205.4 | 215.4 |
Post Trade | 160.1 | 163.1 | 172.6 | 177.3 |
Information Services | 43.6 | 39.4 | 42.1 | 44.0 |
Technology Services | 27.5 | 29.6 | 30.1 | 27.9 |
Corporate and other (including LSEG related) | 11.8 | 12.2 | 13.6 | 13.2 |
Operating expenses | -218.8 | -214.4 | -199.3 | -199.5 |
Staff costs | -89.0 | -87.5 | -79.9 | -82.8 |
Other operating expenses | -129.9 | -126.9 | -119.4 | -116.8 |
EBITDA | 217.3 | 232.5 | 264.4 | 278.4 |
EBITDA Margin | 49.8% | 52.0% | 57.0% | 58.2% |
About Euronext
Euronext is the leading pan-European market infrastructure, connecting local economies to global capital markets, to accelerate innovation and sustainable growth. It operates regulated exchanges in
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Disclaimer
This press release contains inside information within the meaning of article 17(1) of Regulation (EU) 596/2014 of the
NO OFFERING IS BEING MADE TO ANY PERSON IN ANY JURISDICTION. THIS PRESS RELEASE MAY NOT BE USED FOR, OR IN CONNECTION WITH, AND DOES NOT CONSTITUTE, OR FORM PART, AN OFFER BY, OR INVITATION BY OR ON BEHALF OF, EURONEXT OR ANY REPRESENTATIVE OF EURONEXT, TO PURCHASE ANY SECURITIES OR AN OFFER TO SELL OR ISSUE, OR THE SOLICITATION TO BUY SECURITIES BY ANY PERSON IN ANY JURISDICTION. NO ACTION HAS BEEN OR WILL BE TAKEN IN ANY JURISDICTION BY EURONEXT THAT WOULD PERMIT AN OFFERING OF THE ORDINARY SHARES OR POSSESSION OR DISTRIBUTION OF A PROSPECTUS IN ANY JURISDICTION.
The Euronext ordinary shares to be issued in connection with the Proposed Combination have not been and will not be registered under the
Information Regarding Forward-Looking Statements. This press release includes forward-looking statements. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond Euronext’s, the Borsa Italiana Group’s and the
No Profit Forecasts or Estimates. No statement in this press release is intended to be or is to be construed as a profit forecast or estimate for any period and no other statement in this press release should be interpreted to mean that earnings or earnings per share for Euronext for the current or future financial years, or those of the
Financial Information
Financial information relating to the
Financial information relating to Euronext has been extracted without material adjustment from the audited financial statements as of, and for, the financial year ended
The combined financial information included in this press release has not been prepared in accordance with the requirements of the Prospectus Regulation18 nor Regulation S-X of the
Financial objectives are internal objectives of Euronext to measure its operational performance and should not be read as indicating that Euronext is targeting such metrics for any particular financial year. Euronext’s ability to achieve these financial objectives is inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond Euronext’s control, and upon assumptions with respect to future business decisions that are subject to change. As a result, the Euronext’s actual results may vary from these financial objectives, and those variations may be material.
Efficiencies are net, before tax and on a run-rate basis, i.e., taking into account the full-year impact of any measure to be undertaken before the end of the period mentioned. The expected operating efficiencies and cost savings were prepared on the basis of a number of assumptions, projections and estimates, many of which depend on factors that are beyond Euronext’s control. These assumptions, projections and estimates are inherently subject to significant uncertainties and actual results may differ, perhaps materially, from those projected. Euronext cannot provide any assurance that these assumptions are correct and that these projections and estimates will reflect Euronext 's actual results of operations.
Transaction conditions. Completion of the Proposed Combination is subject to the satisfaction of a number of conditions as more fully described in the Circular. Consequently, there can be no certainty that completion of the Proposed Combination will be forthcoming.
This press release is for information purposes only: it is not a recommendation to engage in investment activities and is provided “as is”, without representation or warranty of any kind. While all reasonable care has been taken to ensure the accuracy of the content, Euronext does not guarantee its accuracy or completeness. Euronext will not be held liable for any loss or damages of any nature ensuing from using, trusting or acting on information provided. No information set out or referred to in this publication may be regarded as creating any right or obligation. The creation of rights and obligations in respect of financial products that are traded on the exchanges operated by Euronext’s subsidiaries shall depend solely on the applicable rules of the market operator. All proprietary rights and interest in or connected with this publication shall vest in Euronext. This press release speaks only as of this date. Euronext refers to
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1 Subject to conditions presented below
2
3 Plus an additional amount reflecting the cash generated to completion. Excluding cash and liquid assets (after deduction of regulatory requirements) and borrowings, representing a total net liability of €42m as of
4 Euronext and its subsidiaries following completion of the Proposed Combination (for the avoidance of doubt, including the
5 CDP Equity S.p.A.
6 Intesa Sanpaolo S.p.A
7 EPS adjusted from PPA, exceptional items and tax related to those items, based on a price per Ordinary Share of €102.5 as of
8 Through CDP Equity investment
9 As defined in the Alternative Performance Measure section
10 Euronext and the
11 At end of
12 As of January to
13 As of
14 EPS adjusted from PPA, exceptional items and tax related to those items, based on a price per Ordinary Share of €102.50 as of
15 Plus an additional amount reflecting the cash generated to completion. Excluding cash and liquid assets (after deduction of regulatory requirements) and borrowings, representing a total net liability of €42m as of
16 Based on a price per Ordinary Share of €102.50 as of
17 Pro forma net debt leverage is defined as net debt pro forma of the transaction divided by the combined EBITDA of
18 Regulation (EU) 2017/1129 of the
Attachment
- 20201009_Euronext Borsa binding PR
© OMX, source