LSE Agrees $5 Billion Borsa Sale to Euronext, Italian Banks

2/2 © Bloomberg. Italy's Stock Exchange, the Borsa Italiana which is part of the London Stock Exchange Group Plc, stands in the Piazza Affari in Milan, Italy, on Thursday, Aug. 16, 2018. Italy's banks are particularly exposed to government bond yield changes, and the next couple of months hold several events, Turkish crisis aside, that investors should be on the look out for. 2/2

(Bloomberg) -- London Stock Exchange Group (LON:LSE) Plc agreed to sell Borsa Italiana to Euronext (PA:ENX) and two Italian lenders for more than 4.33 billion euros ($5.1 billion).

LSE, which is selling Borsa Italiana to get approval from the European Union for its $27 billion Refinitiv deal, announced the transaction in a statement Friday after exclusive talks between the parties started last month.

The LSE will sell its entire shareholding for 4.3 billion euros in cash plus an additional amount reflecting cash generation through to the deal’s completion.

“We believe the sale of the Borsa Italiana group will contribute significantly to addressing the EU’s competition concerns,” said David Schwimmer, LSE’s chief executive officer. The transaction is expected to close in the first half of next year.

Adding Borsa Italiana would give Euronext about a quarter of all equity trading in Europe and mean that 28 of the Euro Stoxx 50 companies are listed on its markets. Bloomberg News first reported about the deal completion Thursday.

Borsa Italiana is seen as a strategic asset in Italy because of its ownership of MTS SpA, a platform used to trade government bonds, and the Italian government has sought to engineer a deal for months. Euronext, the owner of the Paris and Amsterdam exchanges, is bidding with Cassa Depositi e Prestiti SpA, a state-backed lender, and Intesa Sanpaolo (OTC:ISNPY) SpA, Italy’s biggest bank. Those institutions would take stakes in Euronext.

Euronext will finance the deal through 1.8 billion euros of new debt and a 2.4 billion euro capital raise, including a 700 million euro private placement with CDP and Intesa SanPaolo, and a rights offer to existing shareholders.

Italian institutions will also have the right to name the new chairman of Euronext. Their combined stake will be at the same level of French shareholders, Euronext CEO said last month.

The deal is the second major transaction involving Italy’s CDP announced this week, after Nexi (MI:NEXII) SpA agreed to buy SIA SpA to create one of Europe’s biggest payment providers.

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