Following the announcement by Deutsche Börse on 28 September 2016 and update on 20th December that the London Stock Exchange Group (LSEG) and LCH.Clearnet Group were exploring the sale of LCH.Clearnet, LSEG and LCH Group entered into exclusive discussions with Euronext.
LSEG and LCH Group confirmed today that they have received an irrevocable all-cash offer from Euronext which has been granted exclusivity to acquire 100 percent of the share capital and voting rights of Clearnet.
Multi-Asset Central Counterparty
Clearnet is a leading, multi-asset, eurozone-based Central Counterparty (CCP) serving Euronext’s markets, pan-European electronic trading platforms and OTC markets, with gross income of €137 million and profit after tax of €36 million in 2015. Together, Euronext and Clearnet will deliver a powerful multi-asset CCP based in the eurozone.
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The transaction will strengthen the long-standing relationship between Euronext and Clearnet, and cement the strategic future of Clearnet within the eurozone. It will create a compelling value proposition for customers based on capital efficiency, product innovation and Execution certainty.
The transaction will strengthen the long-standing relationship between Euronext and Clearnet.
Stéphane Boujnah, Chief Executive Officer and Chairman of the Managing Board of Euronext, said: “The potential acquisition of Clearnet represents an opportunity for Euronext to achieve revenue growth and diversification. We will be in a position to provide our existing and future clients with a pan-European, fully integrated trading and post-trade platform. Euronext remains committed to delivering the best long-term solution for its post-trade activities in the interests of its clients and shareholders, irrespective of whether the acquisition of Clearnet is completed. We are looking forward to further strengthening our role as the leading integrated market platform of the eurozone, powering pan-European capital markets to finance the real economy.”
As the transaction is contingent on, among other things, completion of the Deutsche Borse/LSEG merger, which remains under review by the European Commission and other authorities, Euronext continues to explore options for derivatives clearing after the expiry of the cash equities and derivatives clearing agreements with Clearnet in December 2018.
Transaction Highlights
The contemplated acquisition of Clearnet will allow Euronext to create one of the leading market infrastructure groups in the eurozone and significantly diversify its revenue mix.
It will also accelerate Euronext’s growth by boosting the achievement of its ambitions in derivatives, by enhancing its ability to pursue growth initiatives and by adding new and fast growing Fixed Income and CDS asset classes.
The contemplated transaction is expected to generate significant cost synergies, the majority of which are anticipated to be delivered by 2020.
The purchase price of €510 million, which will be subject to a closing adjustment for any change in surplus regulatory capital, will be funded through a combination of debt facilities and existing cash.
An Extraordinary General Meeting (EGM) of Euronext’s shareholders will be held to approve the transaction in mid-February 2017. The Managing Board and the Supervisory Board of Euronext have already unanimously approved the transaction and will unanimously recommend that Euronext shareholders vote in favour of the transaction at the forthcoming EGM.
