Exchange Eyes Sale Of Italian Operation -- WSJ
September 19 2020 - 3:02AM
Dow Jones News
By Ben Dummett in London and Giovanni Legorano in Rome
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (September 19, 2020).
London Stock Exchange Group PLC took a key step toward gaining
regulatory approval for its $15 billion acquisition of
financial-data company Refinitiv Holdings Ltd. by entering into
exclusive talks for the sale of its Italian exchange operator.
LSE said Friday it is in discussions to sell Borsa Italiana
Group to a consortium comprising pan-European rival Euronext NV, an
investment arm of the Italian government and Intesa Sanpaolo SpA
for an undisclosed amount.
The U.K.-based exchange operator indicated in July that it might
sell Borsa Italiana amid efforts to secure approval from Europe's
antitrust regulator for the much bigger Refinitiv deal. The
European Commission has raised concerns that the tie-up could give
the combined entity undue power over European government-bond
trading, among other areas.
But the sale of Borsa Italiana, which includes bond-trading
platform MTS SpA, is expected to reduce that potential sway over
the market, bankers and analysts have said.
A representative for the commission declined to comment.
Still, the LSE cautioned that the talks may not end up in a
deal.
The potential sale also underscores the pressure exchange
operators are under to boost growth through acquisitions. By
acquiring Refinitiv from a Blackstone Group Inc.-led consortium,
LSE is betting a big part of its future on the growing demand for
market data. The move comes as new competition and computerized
trading is squeezing the fees that stock-market operators generate
from the buying and selling of stocks.
By comparison, Euronext is focused on gaining scale through
establishing a network of exchanges across Europe to gain new
sources of revenue and reduce costs. Euronext already operates
markets in Belgium, France, Ireland, the Netherlands, Norway and
Portugal. The Italian exchange would be its biggest source of
revenue if the deal is completed. In 2019, Euronext generated 679.1
million euros, equivalent to $804.7 million, in revenue. LSE
doesn't break out revenue for the Italian exchange.
LSE also received bids for the Italian exchange from Germany's
Deutsche Boerse AG and Switzerland-based SIX Group AG. While the
values of each bid couldn't be learned, Euronext had a key
advantage by teaming up with Italy's Cassa Depositi e Prestiti, a
state-controlled development bank that is more than 80% owned by
the country's economy ministry. That partnership could save the
deal from being blocked by the Italian government, with Economy
Minister Roberto Gualtieri saying earlier this month it could take
such action if the government found the bidder unacceptable.
Write to Ben Dummett at ben.dummett@wsj.com and Giovanni
Legorano at giovanni.legorano@wsj.com
(END) Dow Jones Newswires
September 19, 2020 02:47 ET (06:47 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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