Three of the top notch exchanges are expected to place an individual bid for the European exchange group Euronext, says a report from The Wall Street Journal, citing people familiar with the matter. As per the report, London Stock Exchange Group (LSE), NASDAQ OMX Group, Inc. (NDAQ) and Deutsche Börse AG are considering acquiring the European exchange group, which was acquired last week by IntercontinentalExchange Group Inc. (ICE).
It is believed that all the three exchanges are in discussion with advisers over a possible offer for the Euronext, but as of now, none of them have taken help of any bankers. There are possibilities that buyers may not move ahead with the acquisition owing to other priorities and challenges.
Regulators stance will be interesting to watch
Euronext was acquired last week by ICE, an Atlanta-based commodities and derivatives trading giant, for $11 billion. At the time of deal, ICE agreed to spun-off Euronext soon. The decision to separating Euronext was primarily taken to lower the concerns of the European policy regulators’ “about the standing of European markets in the bigger U.S. company,” says the report.
The exchange industry, over the past few years, has been in a consolidation phase, but many of the deals got abandoned owing to regulators objection on the deals being anticompetitive or not in the national interest.
It will be interesting to watch how the regulators will treat the Euronext situation as the exchange has bourses in Paris, Amsterdam, Brussels and Lisbon. According to ICE officials, the group plans to spin off the exchange in an initial public offering next year.
Euronext not in best shape, but may offer value
It is generally seen that the companies considering a public offering, also crave for a sale to deliver a “quicker, cleaner payout depending on the circumstances,” says WSJ. Interested buyers also wait for the offering as it gives them a chance to gauge the financials and assets of the target company.
Euronext, which is the world’s fifth-largest stock-exchange group in terms of companies listed, may offer value to the bidders. According to a data from the World Federation of Exchanges, Euronext account for about $2.8 trillion in market capitalization, in terms of stocks listed. However, bidders may feel a pinch as the Euronext has lost a considerable value owing to the recent economic downturn in the region. Also, Euronext’s operations faced some challenges due to new taxes on trading.