TIDMLSE
RNS Number : 6194B
London Stock Exchange Group PLC
09 October 2020
9 October 2020
London Stock Exchange Group plc
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN
PART, DIRECTLY OR INDIRECTLY, IN OR INTO OR FROM ANY JURISDICTION
WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR
REGULATIONS OF SUCH JURISDICTION
This announcement contains inside information
For immediate release
Proposed Divestment of the Borsa Italiana Group to Euronext N.V.
for EUR4.325 billion
Further to the announcement on 18 September 2020 regarding
London Stock Exchange Group plc (LSEG) entering into exclusive
discussions with Euronext N.V. (Euronext) in relation to the sale
of the Borsa Italiana group (Borsa Italiana), LSEG confirms it has
agreed to sell its entire shareholding in London Stock Exchange
Group Holdings Italia S.p.A (LSEG Italia), the parent company of
Borsa Italiana, to Euronext for an equity value of EUR4.325
billion, plus an additional amount reflecting cash generation to
completion (the Transaction). The Transaction is conditional upon,
amongst other things, the divestment of Borsa Italiana or any
material part thereof (including MTS S.p.A. (MTS)) being a
condition of any European Commission (EC) clearance decision for
the Refinitiv transaction (the Refinitiv Transaction).
Background
LSEG announced on 31 July 2020 that, in the context of the EC's
Phase II review of the Refinitiv Transaction, it had commenced
exploratory discussions which may result in a sale of LSEG's
interest in MTS or potentially Borsa Italiana as a whole. Having
launched a sale process for each of MTS and Borsa Italiana and
having weighed the merits of the divestment of each in the context
of the EC's Phase II review of the Refinitiv Transaction , LSEG
concluded it was in the best interests of shareholders to divest
Borsa Italiana as a whole. LSEG also noted the additional benefits
of keeping the MTS and Borsa Italiana businesses together for their
customers and stakeholders. As a result, and having received and
reviewed a number of competitive proposals from several parties for
each of MTS and Borsa Italiana, LSEG announced on 18 September 2020
that it had entered into exclusive discussions with Euronext. Those
discussions led to the signing of a Share Purchase Agreement (the
SPA) between LSEG and Euronext on 9 October 2020.
Reasons for the Transaction
While the EC's review of the Refinitiv Transaction is still
ongoing, it is LSEG's expectation that a divestment of Borsa
Italiana or a material part thereof (including MTS) will be a
condition to any EC clearance for the Refinitiv Transaction. The
entry into the SPA, the approval by the EC of Euronext as the
acquirer of Borsa Italiana and the receipt of certain other
approvals for the Transaction, are therefore expected to be
critical factors in the successful attainment of merger control
clearance for the Refinitiv Transaction from the EC.
Whilst the principal benefit of the Transaction is to facilitate
the completion of the Refinitiv Transaction, the divestment, which
represents an enterprise valuation multiple of 16.7x 2019 adjusted
EBITDA,(1) allows LSEG to achieve an attractive valuation for Borsa
Italiana. The Board believes that the overall strategic rationale
for, and financial benefits of, the Refinitiv Transaction remain
compelling notwithstanding the divestment of Borsa Italiana.
LSEG is expected to receive proceeds in cash on closing (before
deductions of applicable taxes and other transaction related costs)
of EUR4.325 billion plus an additional amount reflecting cash
generation to completion. It is LSEG's intention to use the net
proceeds from the Transaction to repay indebtedness related to the
Refinitiv Transaction and for general corporate purposes. This will
allow LSEG to reduce leverage following completion of the Refinitiv
Transaction, bringing LSEG closer to its target net debt to
adjusted EBITDA ratio of 1.0-2.0x within a desirable timeframe.
Commenting on the Transaction, David Schwimmer, CEO, LSEG,
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."
Commenting on the Transaction, Raffaele Jerusalmi, CEO, Borsa
Italiana S.p.A, 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."
Terms of the Transaction
As Euronext is an 11.1 per cent shareholder of LSEG's subsidiary
LCH S.A., Euronext is deemed to be a related party of LSEG for the
purposes of the Listing Rules. The Transaction is therefore
considered a related party transaction and is conditional upon the
approval of LSEG's shareholders at a General Meeting. The
Transaction also constitutes a Class 2 transaction under the
Listing Rules.
The sale of Borsa Italiana to Euronext is supported by the Board
of LSEG who intend to recommend that shareholders vote in favour of
the resolution to approve the Transaction at a General Meeting to
be convened in due course.(2) The Company will shortly publish a
shareholder circular setting out further details of the Transaction
and including a Notice of General Meeting, which is expected to be
held in early November 2020.
Completion of the Transaction will be dependent upon the
divestment of a member of Borsa Italiana being a condition of any
EC clearance decision for the Refinitiv Transaction, the EC having
confirmed that it either approves or does not object to Euronext as
the purchaser of Borsa Italiana and the Refinitiv Transaction
closing in accordance with its terms (each of such conditions being
waivable by LSEG). The Transaction is also subject to approval by
LSEG's and Euronext's shareholders. With respect to Euronext's
shareholder approval, Euronext's Reference Shareholders (which
account for 23.3% of the Euronext issued share capital) have
undertaken to vote their shares in favour of the shareholder
resolution approving the Transaction. The Transaction is also
conditional on required anti-trust and regulatory approvals
including under Italy's foreign direct investment regime.
The Transaction is expected to close in the first half of 2021 .
LSEG expects to complete the Refinitiv Transaction by the end of
2020 or early in 2021, ahead of completion of this Transaction.
Description of Borsa Italiana
Borsa Italiana, which comprises LSEG Italia and its
subsidiaries, constitute a European financial markets and
infrastructure business which comprises, inter alia: (i) Borsa
Italiana S.p.A, the operator of the Italian stock exchange, in
which LSEG Italia holds a 99.99% stake; (ii) MTS S.p.A., the
European fixed income trading venue in which Borsa Italiana S.p.A
holds a 62.53 per cent. majority stake; (iii) Cassa di
Compensazione e Garanzia S.p.A., the Italian clearing house; and
(iv) Monte Titoli S.p.A., an Italian-based custody and settlement
business.
In the financial year ended 31 December 2019, Borsa Italiana
contributed adjusted EBITDA of EUR280 million and profit before tax
of EUR200 million to LSEG, and had gross assets of EUR1,843 million
(excluding central counterparty clearing (CCP) assets).(3)
(1) Based on 2019 adjusted EBITDA of EUR280m, excluding
intragroup EBITDA of EUR(16)m and non-underlying costs of
EUR(5)m.
(2) As a consequence of their roles in Borsa Italiana, and
Professor Sironi's role in Intesa Sanpaolo, Raffaele Jerusalmi and
Andrea Sironi did not take part in the Board's consideration of the
Transaction.
(3) Excluded from these figures are intragroup EBITDA of
EUR(16)m, profit before tax of EUR(18)m and gross assets of EUR17m
between Borsa Italiana and LSEG. Adjusted EBITDA excludes
non-underlying costs of EUR(5)m.
For further information, please contact:
+44 (0)20 7797
London Stock Exchange Group plc 1222
Media Relations: Gavin Sullivan, Lucie Holloway +44 (0)20 7797
Investor Relations: Paul Froud 3322
Goldman Sachs International (Lead Financial
Adviser to LSEG) +44 (0)20 7774
FX de Mallmann, Mark Sorrell, James Lucas 1000
Morgan Stanley (Lead Financial Adviser to LSEG) +44 (0)20 7425
Matthew Jarman, Vipin Chhajer, Duncan Williamson 8000
Robey Warshaw (Lead Financial Adviser to LSEG) +44 (0)20 7317
Simon Robey, Philip Apostolides 3900
Barclays (Corporate Broker, Financial Adviser
and Sponsor to LSEG) + 44 (0)20 7623
Andrew Tusa, Ben Plant, Hugh Moran 2323
RBC Capital Markets (Corporate Broker to LSEG) +44 (0)20 7653
Oliver Asplin Hearsey, Marcus Jackson 4000
Teneo (Communications Adviser to LSEG) +44 (0)20 7420
Lucas van Praag, Philip Gawith, Doug Campbell 3183
Important notices
This announcement does not constitute or form part of any offer,
invitation to sell , otherwise dispose of or issue, or any
solicitation of any offer to purchase or subscribe for, any shares
or other securities nor shall it or any part of it, nor the fact of
its distribution form the basis of , or be relied on in connection
with, any contract commitment or investment decision.
This announcement has been prepared solely for the Transaction
referred to in this announcement. A shareholder circular will be
published by LSEG in connection with the Transaction in due
course.
Certain figures contained in this announcement, including
financial information, have been subject to rounding adjustments.
Accordingly, in certain instances, the sum or percentage change of
the numbers contained in this announcement may not conform exactly
with the total figure given.
Goldman Sachs International (Goldman Sachs), which is authorised
by the Prudential Regulation Authority and regulated by the
Financial Conduct Authority and the Prudential Regulation Authority
in the United Kingdom, is acting as lead financial adviser to LSEG
and no one else in connection with the Transaction and the matters
set out in this announcement. In connection with such matters,
Goldman Sachs, its affiliates, and its or their respective
directors, officers, employees and agents will not regard any other
person as their client, nor will they be responsible to any other
person for providing the protections afforded to their clients or
for providing advice in relation to the Transaction or the contents
of this announcement or any other matter referred to herein.
Morgan Stanley & Co. International plc (Morgan Stanley),
which is authorised by the Prudential Regulation Authority and
regulated by the Financial Conduct Authority and the Prudential
Regulation Authority in the United Kingdom, is acting as lead
financial adviser to LSEG and no one else in connection with the
matters set out in this announcement. In connection with such
matters, Morgan Stanley, its affiliates, and its or their
respective directors, officers, employees and agents will not
regard any other person as their client, nor will they be
responsible to any other person for providing the protections
afforded to their clients or for providing advice in relation to
the contents of this announcement or any other matter referred to
herein.
Robey Warshaw LLP (Robey Warshaw), which is authorised and
regulated by the Financial Conduct Authority is acting as lead
financial adviser to LSEG and no one else in connection with the
matters set out in this announcement and will not be responsible to
anyone other than LSEG for providing the protections afforded to
its clients or for providing advice in relation to the contents of
this announcement or any other matter referred to herein.
Barclays Bank plc, acting through its investment bank
(Barclays), which is authorised by the Prudential Regulation
Authority and regulated by the Financial Conduct Authority and the
Prudential Regulation Authority in the United Kingdom, is acting as
sponsor, corporate broker and financial adviser to LSEG and no one
else in connection with the matters set out in this announcement
and will not be responsible to anyone other than LSEG for providing
the protections afforded to clients of Barclays nor for providing
advice in relation to the contents of this announcement or any
other matter referred to herein.
RBC Europe Limited (trading as RBC Capital Markets), which is
authorised by the Prudential Regulation Authority and regulated by
the Financial Conduct Authority and the Prudential Regulation
Authority in the United Kingdom, is acting for LSEG and no one else
in connection with the matters referred to in this announcement and
will not be responsible to anyone other than LSEG for providing the
protections afforded to clients of RBC Capital Markets, or for
providing advice in connection with the matters referred to in this
announcement.
Forward looking statements
This announcement (including information incorporated by
reference in this announcement), oral statements made regarding the
Transaction and other information published in connection with the
Transaction contain statements which are, or may be deemed to be,
"forward-looking statements". Forward-looking statements are
prospective in nature and are not based on historical facts, but
rather on current expectations and projections about future events,
and are therefore subject to risks and uncertainties which could
cause actual results to differ materially from the future results
expressed or implied by the forward-looking statements. The
forward-looking statements contained in this announcement include
statements relating to the expected effects of the Transaction on
LSEG and its group, the expected timing and scope of the
Transaction and other statements other than historical facts.
Often, but not always, forward-looking statements can be identified
by the use of forward-looking words such as "plans", "expects" or
"does not expect", "is expected", "is subject to", "budget",
"scheduled", "estimates", "forecasts", "intends", "anticipates" or
"does not anticipate", or "believes", or variations of such words
and phrases or statements that certain actions, events or results
"may", "could", "should", "would", "might" or "will" be taken,
occur or be achieved.
Although LSEG believes that the expectations reflected in such
forward-looking statements are reasonable, LSEG can give no
assurance that such expectations will prove to be correct. There
are a number of factors that could cause actual results and
developments to differ materially from those expressed or implied
by such forward-looking statements. These factors include the
satisfaction of the conditions to the Transaction as well as
factors such as future market conditions, currency fluctuations,
the behaviour of other market participants, the actions of
regulators and other factors such as changes in the political,
social and regulatory framework, or in economic or technological
trends or conditions. Other unknown or unpredictable factors could
cause actual results to differ materially from those in the
forward-looking statements. Such forward-looking statements should
therefore be construed in the light of such factors.
None of LSEG or any of its associates or directors, officers or
advisers provides any representation, assurance or guarantee that
the occurrence of the events expressed or implied in any
forward-looking statements in this announcement will actually
occur. You are cautioned not to place undue reliance on these
forward-looking statements. Other than in accordance with their
legal or regulatory obligations (including under the Listing Rules,
the Disclosure Guidance and Transparency Rules and the Prospectus
Regulation Rules of the FCA), LSEG is under no obligation, and LSEG
expressly disclaims any intention or obligation, to update or
revise publicly any forward-looking statements, whether as a result
of new information, future events or otherwise.
Transaction conditions
Completion of the Transaction is subject to the satisfaction of
a number of conditions. Consequently, there can be no certainty
that completion of the Transaction will be forthcoming.
Transmission of this announcement
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transmitted directly or indirectly into or from any jurisdiction
where to do so would constitute a violation of the relevant laws or
regulations of such jurisdiction. Any failure to comply with this
restriction may constitute a violation of such laws or regulations.
Persons into whose possession this announcement or other
information referred to therein comes, should inform themselves
about, and observe, any restrictions in such laws or
regulations.
Compliance with laws
This announcement has been prepared for the purpose of complying
with the applicable laws and regulations of the United Kingdom and
information disclosed may not be the same as that which would have
been disclosed if this announcement had been prepared in accordance
with the laws and regulations of jurisdictions outside the United
Kingdom.
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END
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