(Adds Euronext board, details)
MILAN, Oct 8 (Reuters) - The board of the London Stock
Exchange is expected to approve on Thursday a binding
offer by pan-European bourse operator Euronext for the
Milan stock exchange, three sources familiar with the matter
said.
LSE entered exclusive talks with Euronext last month, after
the Paris bourse owner saw off competition from Deutsche Boerse
and Swiss rival SIX for Borsa Italiana.
LSE is selling Borsa as part of regulatory remedies to see
through its $27 billion purchase of data provider Refinitiv,
which is 45% owned by Thomson Reuters, the parent
company of Reuters News.
The sale of Borsa, which is contingent on the Refinitiv deal
going through, is politically sensitive in Italy due to Borsa's
ownership of MTS, the bond platform which handles trading of
Italy's 2.1 trillion euro ($2.5 trillion) government bonds.
To secure the backing of the Rome government, Euronext has
teamed up with state agency Cassa Depositi e Prestiti (CDP) and
Italy's biggest bank Intesa SanPaolo.
In addition to Paris, Euronext runs also stock exchanges in
Belgium, Ireland, the Netherlands, Norway and Portugal.
Having long set its sights on Borsa Italiana, which Chief
Executive Stephane Boujnah said was "a natural fit", Euronext
used its federal model to draft a governance system that would
grant Italy ample representation.
Milan would become the largest contributor to Euronext
revenue, at roughly 35% of the combined group.
One of the sources said Euronext's board had approved the
bid on Wednesday. A separate source said an announcement could
come as early as Friday.
Both LSE and Euronext declined to comment.
Sources have said the bids have valued the Milan stock
exchange at up to nearly 4 billion euros.
Euronext, which has not disclosed the value of its offer,
has said it will finance the purchase with existing cash and by
raising new equity as well as debt.
It will launch a rights issue for current shareholders and a
capital increase reserved for CDP Equity and Intesa.
Goldman Sachs, Morgan Stanley and Barclays advised LSE.
Euronext worked with JPMorgan and Mediobanca, and CDP with
Lazard.
($1 = 0.8507 euros)
(Reporting by Valentina Za in Milan, Giselda Vagnoni in Rome,
Pamela Barbaglia in London and Maya Nikolaeva in Paris; Editing
by Jan Harvey)