Euronext CEO Wants ‘Transformational’ M&A for Exchange Owner

 

 

Euronext NV, the operator of the Paris and
Amsterdam stock exchanges, wants to step up dealmaking in a sign
that it may seek multi-billion-euro diversification along the
lines of its London counterpart.

The company announced a three-year plan Thursday that
included looking at “transformational deals,” particularly ones
that would enter new geographies without sacrificing Euronext’s
investment-grade credit rating.

Stephane Boujnah, Euronext’s chief executive officer, said
in an interview that he’s targeting fragmented markets like
data, commodities and post-trade businesses. His comments come
about two months after London Stock Exchange Group Plc announced
a blockbuster $27 billion deal for Refinitiv, a takeover driven
by the target’s data capabilities.

Euronext wants to speed its migration “from being a pan-
European exchange to a leading pan-Europe market infrastructure”
company, “covering the whole value chain,” Boujnah said.
Boujnah also said he wants revenue that’s not dependent on
trading volumes to be “far above” its current level of 51% of
the company’s total, a justification similar to that made by LSE
executives when they announced the Refinitiv deal.

The CEO, a former investment banker, is also interested in
consolidating more national markets along the lines of
Euronext’s purchase of Norway’s Oslo Bors earlier this year. “We
would like to expand our federal model to be an available home
for single-country exchanges that might consider it,” he said.
However, buying a fixed income platform isn’t a priority, as
that business is concentrated at a few large players like
Tradeweb Markets Inc., he said.

For a transformative deal, Boujnah said he wouldn’t rule
out going to shareholders to raise equity. His chief financial
officer, Giorgio Modica, told journalists earlier that Euronext
would have as much as 2 billion euros ($2.2 billion) to spend.

Stock exchanges have been a hot sector for M&A. LSE hopes
to complete its Refinitiv deal next year after batting away
takeover interest from Hong Kong Exchanges & Clearing Ltd.
Euronext also said:

* Revenue is expected to grow by 2% to 3% over the next three
years, excluding potential acquisitions, driven by both organic
growth and diversification

* Capital spending will remain between 3% and 5% of revenue

* Company aims to save 12 million euros through cost synergies
at Oslo Bors by 2022, while incurring 18 million euros of
restructuring costs.