Borsa Italiana OKs LSE's Takeover Bid

Saturday June 23, 7:51 am ET
By Colleen Barry, AP Business Writer Borsa Italiana Approves $2.19 Billion All-Share Takeover Bid by London Stock Exchange MILAN, Italy (AP) -- The euro1.63 billion ($2.19 billion) all-share takeover of Borsa Italiana SpA by the London Stock Exchange PLC puts the exchanges in a position to realize their goal of becoming the world's primary exchange in a period of rapid consolidation of stock exchanges worldwide, the companies said in a joint statement Saturday.
Under the deal, the two exchanges will remain separate entities, reflecting the distinct market profiles, combined under one group with a value of euro5.77 billion ($7.76 billion), the companies said in a statement outlining terms of the deal.

The takeover "creates the leading diversified exchange group in Europe and the platform for additional strong growth on a European and global scale," the statement said.

Noting the rapid consolidation in the exchange landscape, the exchanges said they "intend to be at the forefront of these changes in order to grow more rapidly by extending its international strategy in the fast-evolving exchange industry environment."

The new group will change its name to reflect its international character, the statement said. It will be headed by current LSE Chief Executive Clara Furse, with Borsa Italiana CEO Massimo Capuano taking the deputy CEO role. The LSE will have seven directors on the board, and the Borsa Italiana five.

Under the deal, London Stock Exchange is offering 4.90 of its own shares for each Borsa Italiana share. The Milan exchange is unlisted and owned mainly by Italian banks.

Borsa Italiana had been examining a variety of options for joining the wave of consolidation in the last year, and board members met for two days this week in Milan to work out details of a deal.

Analysts said the move by the LSE appeared aimed at fending off another takeover attempt by Nasdaq. The London exchange has rebuffed five takeover attempts in two years, including a $5.3 billion bid from Nasdaq, which remains its largest shareholder.

NYSE's acquisition of Euronext, which operates exchanges in Paris, Amsterdam, Brussels and Lisbon, in April kicked off a wave of consolidation in the sector as established stock exchanges face increased competition for business. Nasdaq recently agreed to buy Nordic stock exchange operator OMX AB .

The LSE is considered the jewel of European exchanges, with more than 3,000 companies traded. The Borsa Italiana, with 322, is fourth in Europe for trading volume, behind Euronext, the LSE and Deutsche Boerse.

An Italian deal gives the LSE -- which is predominantly an equities trading market -- greater access to the European bond market. Borsa Italiana has exercised an option to buy NYSE Euronext's stake in their bond-trading joint venture

LSE also would get a business in derivatives, where it has struggled to get established.