LONDON BRIEFING: LSEG And Euronext In Exclusive Talks For Milan Bourse

(Alliance News) - London Stock Exchange Group confirmed on Friday it has entered into exclusive discussions with peer Euronext over the sale of Borsa Italiana.

"There can be no certainty that a transaction will result from these discussions and any potential sale will be dependent upon the outcome of the European Commission's review of the Refinitiv transaction and that transaction closing in accordance with its terms," the stock exchange operator cautioned, referring to its acquisition of the market data and trading platform provider.

Borsa Italiana is 99.99% indirectly owned by LSEG, the company noted. In addition to operating the Milan stock exchange, Borsa Italiana operates a number of other trading platforms, and its group includes clearing house Cassa Di Compensazione e Garanzia, MTS, central securities depository Monte Titoli and Elite.

Euronext had announced on Monday it had submitted an offer to buy Borsa Italiana in partnership with Italy's CDP Equity and Intesa Sanpaolo Spa.

LSEG's announcement Friday means Euronext has been favoured over other potential suitors, such as LSEG's erstwhile merger partner Deutsche Boerse, as well as over Switzerland's SIX, which reportedly was considering joining the bidding.

"The proposed combination of Borsa Italiana and Euronext would create a leading player in continental European capital markets, where Italy would be the largest revenue contributor to the enlarged Euronext group," Euronext had said in its statement on Monday.

"This transformational project would effectively position the newly formed group to deliver the ambition of further building the backbone of the Capital Markets Union in Europe, while at the same time supporting local economies."

Euronext has been on a shopping spree recently, buying the Danish Central Securities Depository, VP Securities, last month to expand its Nordic footprint. It also acquired the Scandinavian electricity exchange Nord Pool in January and the Oslo Stock Exchange in June 2019.

LSEG shares were up 0.4% early Friday. Euronext shares were down 0.8%.

Here is what you need to know at the London market open:

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MARKETS

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FTSE 100: down 0.2% at 6,035.53

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Hang Seng: up 0.5% at 24,468.48

Nikkei 225: closed up 0.2% at 23,360.30

DJIA: closed down 130.40 points, 0.5%, at 27,901.98

S&P 500: closed down 28.48 points, 0.8%, at 3,357.01

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GBP: up at USD1.2964 (USD1.2955)

EUR: up at USD1.1860 (USD1.1821)

Gold: up at USD1,953.50 per ounce (USD1,946.60)

Oil (Brent): up at USD43.64 a barrel (USD43.22)

(changes since previous London equities close)

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ECONOMICS AND GENERAL

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Friday's Key Economic Events still to come

1000 CEST EU euro area balance of payments

1000 EDT US University of Michigan survey of consumers

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UK retail sales registered their fourth straight month of growth in August, but the pace of improvement is slowing, the Office for National Statistics showed. Sales were up 0.8% month-on-month in August, slower than the 3.7% growth posted for July but ahead of expectations, according to FXStreet, of 0.7%. The strength of the retail rebound has been fading since lockdown measures began to be eased, with sales having risen 12% in May and 14% in June. Annually, sales grew 2.8% in August, accelerating from a rise of 1.4% in July. The ONS said sales in August were up 4.0% compared to February's pre-pandemic level. The statistical body noted that there was a "mixed picture" across store types in August, with non-store - such as online - retailing volumes 39% above February, while clothing stores were 16% below pre-pandemic levels.

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BROKER RATING CHANGES

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RBC CUTS SEVERN TRENT TO 'SECTOR PERFORM' ('OUTPERFORM') - TARGET 2450 (2500) PENCE

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RBC RESUMES PENNON GROUP WITH 'OUTPERFORM' - TARGET 1150 PENCE

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RBC RAISES RPS GROUP TO 'OUTPERFORM' ('SECTOR PERFORM') - TARGET 80 (45) PENCE

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COMPANIES - FTSE 100

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Activist investor Daniel Kretinsky, known as the 'Czech Sphinx', has become J Sainsbury's fourth largest shareholder with just under a 3.1% stake. According to a regulatory filing from Sainsbury's on Thursday, the 67.7 million share stake was purchased through Kretinsky's company Vesa Equity Investment Sarl. The transaction is worth close to GBP130 million based on the Thursday closing price of 191.15p.

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COMPANIES - FTSE 250

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Financial services firm Investec guided to a fall in interim earnings against a tough backdrop due to Covid-19. The first half of the year has seen lower average interest rates, reduced client activity and a 22% depreciation of the rand against the pound, the Anglo-South African company said. Investec noted that the challenging environment, brought on primarily by Covid-19, hit economic activity and increased market volatility. Investec said it expects adjusted earnings per share from continuing operations to fall by as much as 63% on a year ago. Basic EPS is seen between 6.5 pence to 8.4p, as much as 66% lower than a year ago. "The business has proved resilient in a period characterised by Covid-19 stringent lockdowns in the first quarter, followed by a gradual reopening of the economies. Severe GDP contractions and volatile financial markets negatively impacted revenues," said Chief Executive Fani Titi. Investec said it is proposing a reduction in its UK bank's London-based headcount by about 210 roles, or 13% of the current total.

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Man Group said it will launch a new share buyback programme of up to USD100 million. The share repurchase programme is in line with the company's policy to "distribute capital to shareholders while maintaining a prudent balance sheet". It expects to buy around 66 million shares under the scheme.

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Budget airline easyJet has hired an executive of holiday operator Tui as its new chief financial officer. Kenton Jarvis will join the board of easyJet at a date to be determined, replacing Andrew Findlay, who was previously announced to be departing. Jarvis is CEO of Aviation and business improvement director for Markets at TUI Group.

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COMPANIES - MAIN MARKET AND AIM

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Irish petrol station operator Applegreen reported a swing to a pretax loss of EUR29.7 million in the first half of 2020 from a profit of EUR10.2 million a year before, as revenue fell 27% to EUR1.1 billion from EUR1.5 billion. Applegreen said it will pay no interim dividend to preserve financial liquidity amid the Covid-19 crisis. "Encouragingly, there was a strong recovery in volumes after the initial lockdown in April and this positive momentum has carried into Q3," the company said.

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Friday's Shareholder Meetings

Accsys Technologies

Surgical Innovations Group

Eurasia Mining

Pearson - GM re approval for amendment to absentee voting policy

Kore Potash - GM re to seek approval for share issue

Personal Assets Trust

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By Tom Waite; thomaslwaite@alliancenews.com

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