London Stock Exchange Group agrees to sell Borsa Italiana to Euronext for €4.325bn
London Stock Exchange Group Plc (LON:LSE) today 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. The equity value of the transaction is €4.325 billion, plus an additional amount reflecting cash generation to completion.
Having received and reviewed a number of competitive proposals from several parties for each of MTS and Borsa Italiana, LSEG announced on September 18, 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 October 9, 2020.
While the European Commission’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, will be critical factors in the successful attainment of merger control clearance for the Refinitiv transaction from the EC.
LSEG says that the principal benefit of the Borsa Italiana deal is to facilitate the completion of the Refinitiv Transaction. The divestment, which represents an enterprise valuation multiple of 16.7x 2019 adjusted EBITDA, 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 €4.325 billion plus an additional amount reflecting cash generation to completion.LSEG intends to use the net proceeds from the Borsa Italiana 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.
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.
The Borsa Italiana deal is expected to close in the first half of 2021. LSEG aims to complete the Refinitiv Transaction by the end of 2020 or early in 2021, ahead of completion of the Borsa Italiana transaction.