Euronext, a pan-European market infrastructure, has announced the initiation of a share repurchase program, signaling a strategic move driven by strong cash generation capabilities. The program, with a maximum allocation of €200 million, underscores Euronext's commitment to a disciplined capital allocation strategy while maintaining its deleveraging path and credit rating intact.

Euronext's Share Repurchase Program: Commencing July 31, 2023

The share repurchase program, scheduled to commence from July 31, 2023 and lasting for a maximum duration of a year, will be executed on Euronext Paris. The primary objective of the program is to reduce Euronext's share capital, with all repurchased shares set to be canceled.

Euronext has introduced the share repurchase program with the primary goal of diminishing its share capital. The initiative allocates a maximum of €200 million, spanning from July 31, 2023, and is slated to run for up to one year. Within the framework of the program, Euronext aims to repurchase approximately 3% of its ordinary shares, in accordance with the authorization granted by the General Meeting on 17 May 2023, while observing a limit of 10%. This strategic move not only reflects Euronext's commitment to disciplined capital management but also aligns seamlessly with its broader financial strategy, duly endorsed by stakeholders.

Euronext's Non-Discretionary Share Repurchase Arrangement

Euronext has established a non-discretionary arrangement with a financial intermediary to conduct the share repurchase, ensuring transparency and adherence to regulatory guidelines. The program will be implemented in compliance with applicable rules and regulations and the Commission Delegated Regulation. It is based on the authority granted by the annual general meeting of shareholders on 17 May 2023.

Crucially, the share repurchase program is designed not to impact Euronext's deleveraging trajectory or credit rating. It will also be in harmony with maintaining the Group's financial flexibility to capitalize on market opportunities and adhere to its existing dividend policy, with a pay-out of 50% of reported net income. Euronext commits to providing regular updates on the progress of the program in accordance with applicable regulations, offering transparency to its stakeholders.

Euronext completes €200 million share repurchase program https://t.co/vE4Joc6Knw

— Jake P. Noch (@Jake_P_Noch) January 3, 2024

Euronext and LCH SA Ensure Orderly Clearing Flow Migration

Earlier, Finance Magnates reported that Euronext was selling its 11.1 percent stake in LCH SA, a major clearing house, to LCH Group Holdings Limited for €111 million. The deal, part of a buyback program, is set to be finalized in early July 2023. Euronext acquired its stake in LCH SA in 2017 through a share swap with LCH Group.

The divestment follows LCH Group's exercise of its buyback option, resulting in the early termination of the existing derivatives clearing agreement between Euronext and LCH SA. Euronext, headquartered in the Netherlands, will realize a tax-free capital gain of around €40 million from the sale. The company, a significant player in European capital markets, is known for operating stock markets across the continent and expanded its reach by acquiring Borsa Italiana. Both Euronext and LCH SA plan to collaborate on a smooth migration of clearing flows from LCH SA to Euronext Clearing.