LSE in exclusive talks with France’s Euronext over Borsa Italiana sale

The London Stock Exchange said it has entered exclusive talks with France’s Euronext after weighing up several offers for its Borsa Italiana business. 

The LSE board met yesterday to discuss its options as it looks to sell bits of the business, including the Italian stock exchange, in order to gain approval from regulators for its blockbuster £20billion merger with data firm Refinitiv.

The sale of the Borsa Italiana prompted a flurry of excitement among European rivals as France’s Euronext, Germany’s Deutsche Boerse and Switzerland’s Six exchange have all tabled offers. 

Today, the LSE said that after considering ‘a number of competitive proposals from several parties’, it has decided to pick Euronext for exclusive talks.

Sell-off: The LSE is hoping that the sale of its Borsa Italiana business will help clear the way for its massive merger with Refinitiv

Sell-off: The LSE is hoping that the sale of its Borsa Italiana business will help clear the way for its massive merger with Refinitiv

Sell-off: The LSE is hoping that the sale of its Borsa Italiana business will help clear the way for its massive merger with Refinitiv

‘The proposed combination of Borsa Italiana and Euronext would create a leading player in continental European capital markets,’ Euronext said in a statement.   

The sale of the Borsa Italiana, dubbed ‘Project Botticelli’, is thought to value the Italian unit at more than £3billion.

The LSE said there was ‘no certainty’ that talks will end in a sale, which it said will be dependent on the outcome of ‘the European Commission’s review of the Refinitiv transaction and that transaction closing in accordance with its terms’. 

The LSE is hoping that the sale will help clear the way for its massive merger with Refinitiv. It announced the deal to buy the data provider, best known among City investors and brokers for its informative trading screens, last year.

The LSE is hoping the merger will help it expand into a rapidly growing niche, and make it the world’s most powerful trading technology business.

But European regulators have thrown a spanner in the works after referring the deal for an in-depth probe, over fears it could hinder competition in the provision of critical data used across global markets.

So the LSE is trying to sell off some of the units it believes are less essential, in order to get the green light from the European Commission.  

According to sources, Six’s offer had attached the largest price tag to the Borsa Italiana, while Euronext’s is the lowest. The LSE bought the Borsa in 2007 for around £1.1billion.

While Six’s offer may have been the most attractive by price, Euronext has teamed up with Italy’s sovereign wealth fund CDP Equity and banking group Intesa Sanpaolo on its bid. 

This could make a deal with Euronext more attractive to the Borsa Italiana – policymakers in Rome are keen to keep a tight grip on the exchange’s bond-trading platform, which is used for trading Italy’s vast pile of sovereign debt. 

Italy’s Treasury has the power to block any takeover of the Borsa through its Golden Power Law, which allows the Government to veto foreign investment in industries which are deemed to be strategic for the country.

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