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HomeBank CapitalEuronext seals Borsa Italiana takeover with capital hike

Euronext seals Borsa Italiana takeover with capital hike

PARIS/MILAN (Reuters) – Euronext on Thursday completed its takeover of the Milan bourse and announced a 1.8 billion euros ($2.2 billion) share sale to fund a deal that turns Italy into the core trading venue of the pan-European stock exchange.

FILE PHOTO: Stephane Boujnah, CEO of stock market operator Euronext is seen during a ceremony at Euronext headquarters at La Defense business and financial district in Courbevoie near Paris, France, November 21, 2019. REUTERS/Charles Platiau

Euronext, which runs bourses in Paris, Amsterdam and Dublin among others, in October clinched the all-cash 4.4 billion euro purchase of Borsa Italiana from the London Stock Exchange, trumping rival bids by Deutsche Boerse and Switzerland’s SIX.

The deal was politically sensitive in Italy due to Borsa Italiana’s ownership of MTS, the platform where the country’s 2.0 trillion euro debt is traded.

To secure Rome’s backing for the transaction, Euronext negotiated a governance set-up under which Italian state investor CDP Equity and top bank Intesa Sanpaolo join the group of Euronext’s core shareholders with stakes, respectively, of 7.3% and 1.3%.

Borsa Italiana’s CEO will join Euronext’s managing board and the CEO of MTS the extended managing board.

As part of the deal, Euronext will move its data centre from Basildon in Britain to Bergamo in northern Italy, where Italian company Aruba runs a 200,000 square metre cloud data centre.

This is slated for the second quarter, pending approval from regulators who, CEO Stephane Boujnah said, were eager to have the data centre in the European Union in light of Brexit.

Boujnah told reporters some of Euronext’s customers, including large international banks, would relocate part of their physical infrastructure to Italy to take advantage of proximity to the exchange’s servers to ensure maximum speed for trading orders.

“It’s a very material decision for Euronext,” Boujnah said, adding it amounted to the firm’s biggest investment in technology since it launched its Optiq trading platform.

Finance Chief Giorgio Modica said details on the size of the investment would be provided as part of a new business plan Euronext will present by the end of the year, probably in October.

“It will make Italy the physical location of the market infrastructure of the group … a major financial hub … that processes 25% of all European equity trades,” Boujnah said.

As the closing of the deal approached, concerns have mounted in Italy in recent weeks about Borsa Italiana’s autonomy and its future role within Euronext.

Boujnah said Euronext had kept silent despite the reports in the Italian media out of respect for the Bank of Italy and market regulator Consob, which this month both blessed the deal.

“There’s no hidden agenda,” he said. “Italian voices will be heard at every single level.”

In addition to the stock sale, Euronext is financing the acquisition with 300 million euros in cash and a 3.7 billion euro bridge loan,…

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