Euronext Closes Stakes Swap Deal, Secures Minority ‎Shareholding in LCH SA

The deal provides Euronext with pre-emption rights in the event of a sale of ‎‎50% or more of ‎LCH SA.

Pan-European stock exchange Euronext has closed the share swap deal that it signed earlier this year with LCH SA, LCH Group and London Stock Exchange Group.

Under the new agreement, Euronext has swapped its current 2.3% stake in LCH Group for an 11.1% stake in LCH SA, resulting in a net capital gain of around €40 million before tax. The deal provides Euronext with pre-emption rights in the event of a sale of 50% or more of the shares in the Paris clearinghouse by LCH Group.

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Euronext will remain on the board of LCH SA and nominate one representative to the clearinghouse’s risk committee. The exchange group will step down from the wider LCH board after completion of the share swap.

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LCH’s Paris arm houses credit default swap clearinghouse CDSClear and provides clearing services across cash equities, derivatives, fixed income and triparty repos.

The deal comes several months after Euronext failed to acquire the Paris-based LCH Clearnet SA. Euronext was due to buy the French clearer for €510 million to pave the way for the merger between Deutsche Börse and the London Stock Exchange. But the merger offer was blocked by EU antitrust commissioners on the grounds that it would create a monopoly in fixed income markets.

Earlier in August, both entities signed an agreement for the continued provision of derivatives and commodities clearing services by LCH.

The agreement allows Euronext to maintain its long-standing ties with the French clearing arm of the London Stock Exchange Group for the purpose of derivatives clearing when their current agreement comes to an end in December 2018.

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