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UPDATE 3-LSE engages Euronext in exclusive Borsa Italiana talks

Fri, 18th Sep 2020 07:42

(Adds further detail, share prices)

By Huw Jones

LONDON, Sept 18 (Reuters) - London Stock Exchange entered
exclusive talks on Friday to sell Borsa Italiana to Euronext,
with the French operator seeing off bids by Deutsche Boerse and
Switzerland's Six as it looks to add another bourse to its
European network.

Dubbed "Project Botticelli", the LSE's sale of the Milan
stock exchange is politically sensitive in Rome because of
concerns about who could take control of Borsa's bond platform,
which handles trading of Italy's government debt.

The 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
, parent company of Reuters News.

Offers for Borsa valued the Italian exchange up to 4 billion
euros ($4.74 billion), sources had said before the LSE board met
on Thursday to review the bids on the table.

It was not immediately clear what price Euronext
had offered to gain exclusivity for its bid negotiations, but
investors welcomed the move and its shares were up 4% at 0800
GMT. LSE stock was up 0.5%.

Euronext was able to win round both the LSE and Rome by
teaming up with Italy's Cassa Depositi e Prestiti and Intesa
Sanpaolo in order to gain Italy's buy-in.

Both CDP and Intesa will become shareholders in the French
exchange operator, if the bid for Borsa succeeds, by subscribing
to a proposed capital increase.

"The proposed combination of Borsa Italiana and Euronext
would create a leading player in continental European capital
markets," Euronext said in a statement.

'ITALIAN ECOSYSTEM'

Under the proposed deal, CDP would have a seat on Euronext's
supervisory board, with a second Italian candidate proposed as
an independent board member who would become chairman of the
combined group.

"Borsa Italiana would maintain its current functions,
structure and relationships within the Italian ecosystem and
preserve its Italian identity and strengths," Euronext said.

Borsa Italiana would join a stable of stock exchanges under
the Euronext banner that span Dublin and Oslo to Brussels,
Amsterdam and Paris, and add significant bond trading, clearing
and settlement capacity.

"Key businesses and central functions of the new group would
be based in Milan and Rome," Euronext said.

It would also bring Milan under euro zone ownership after
Britain left the European Union in a move that would likely
please policymakers in Brussels who want to buttress the bloc's
capital market.

Switzerland's Six had no comment, while Deutsche Boerse
did not immediately respond to requests for comment.

LSE Chief Executive David Schwimmer, a former Goldman Sachs
banker, appears keen to have a deal fleshed out before Dec. 16,
when EU competition officials decide whether to approve the
London exchange's takeover of Refinitiv.
($1 = 0.8444 euros)
(Reporting by Muvija M in Bengaluru, Pamela Barbaglia and Huw
Jones in London, Mike Shields in Switzerland and Tom Sims in
Frankfurt; Editing by Patrick Graham, Jason Neely and Alexander
Smith)

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