London Stock Exchange to sell Italy’s Borsa Italiana for $5.1 billion

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The London Stock Exchange is selling its Italian counterpart to French markets giant Euronext for about $5.1 billion, the companies announced Friday.

Euronext will add Milan’s Borsa Italiana — Italy’s only stock exchange — to its existing portfolio of European exchanges in cities such as Paris, Dublin, Brussels and Amsterdam.

The 4.3 billion-euro deal, expected to close in the first half of next year, is also meant to help the London Stock Exchange Group win approval for its $27 billion purchase of financial-data provider Refinitiv, which European Union regulators are reviewing.

“We believe the sale of the Borsa Italiana group will contribute significantly to addressing the EU’s competition concerns,” LSE Group CEO David Schwimmer said in a statement. “… 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.”

LSE expected the European Commission would require it to sell Borsa Italiana as a condition of the Refinitiv deal amid concerns about the group’s control of the European bond market. The company put Borsa up for sale in July and announced exclusive talks with Euronext in September.

The deal will result in a sizable profit for LSE, which bought Borsa Italiana for 1.6 billion euros in 2007. But the purchase appears to be a heavy lift for Euronext, which said it will issue 1.8 billion euros ($2.1 billion) of new debt and 2.4 billion euros ($2.8 billion) of new equity to finance it.

Euronext nonetheless sees strategic advantages to the deal, saying the combined company will be Europe’s top listing venue with more than 1,800 listed companies. The Borsa alone had 370 listed firms and a total domestic market cap of 545 billion euros ($643.7 billion) as of Aug. 31.

“Thanks to this transaction, Euronext will significantly diversify its revenue mix and its geographical footprint by welcoming the market infrastructure of Italy, a G7 country and the third-largest economy in Europe,” Euronext CEO Stéphane Boujnah said in a statement.

With Post wires

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