Thursday 14 December 2017

Euronext offers €510m for London Stock Exchange's French clearing business

Stock price information is displayed on screens as they hang above the Paris stock exchange
Stock price information is displayed on screens as they hang above the Paris stock exchange

Euronext said it has offered €510m to buy the London Stock Exchange Group's French clearing business, helping clear the way for LSE Group's proposed $28 billion merger with Deutsche Boerse .

LSE Group and LCH Group Limited confirmed that the companies have agreed on the terms of Euronext's all-cash offer.

The announcement comes weeks after the three companies said they were in talks over the sale of the French clearing subsidiary of LCH.Clearnet to address competition concerns raised by the European Commission (EC) in relation to the LSE and Deutsche Boerse's planned merger.

The EC had stated its objections to the LSE's merger with Deutsche Boerse in December, but outlined fewer concerns than in its first letter sent to both exchange operators in September. Its concerns were focused on the clearing of derivatives contracts.

Clearing is becoming a much more lucrative business as global reforms introduced after the 2007-09 financial crisis mean banks must clear the bulk of their derivatives trades to make them safer and more transparent.

Buying Clearnet would give Euronext control of a platform that it provides much of the revenue for. It would also mean Euronext would not have to rely on a competitor's clearing services.

Euronext said it expected the deal to add to its earnings from the first full year in the double digits, before costs pegged at €40m.

The French firm pegged synergies at €13m before taxes.

Reuters

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