Euronext (ENX.PA) said on Tuesday that it has agreed to acquire the Irish Stock Exchange (ISE) for €137 million ($162.5 million) in cash to boost its stock business, exchange traded funds and bond products.
Euronext has recently embarked on a consolidation spree to expand into new markets. In turn, the Dublin exchange has been on the lookout for a partner to join forces with, as the firm seeks to position itself for opportunities after Brexit.
In addition to its position as a leading global centre for the listing of funds and a popular hub for bond listings, the exchange’s main attraction lies in Ireland’s continued membership in the euro bloc as London prepares to leave.
Today’s deal is expected to close in the first quarter of 2018 and to boost Euronext’s pro forma 2017 earnings. ISE made an operating income of €8.0 million in 2016 on revenues of €29.4 million. According to the company’s latest annual report, the number of stock trades on the bourse increased more than 17 percent to a record 6.6 million.
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The combined group pro forma 9 month revenue would amount to €416.9 million with an EBITDA of €227.7 million, Euronext said.
Euronext is a pan-European exchange and runs bourses in Paris, Amsterdam, Brussels, Lisbon and London.
Since the Brexit referendum, the ISE has been evaluating potential strategies to ensure that the bourse is well placed to take full advantage of Brexit-related business opportunities. However, the deal threatens to further reduce the clout of the Dublin bourse which has stood for 221 years as an iconic symbol of an independent Irish financial ecosystem.
Commenting on the news, Stéphane Boujnah, CEO and Chairman of Euronext, said: “The Irish Stock Exchange joining Euronext represents a major milestone in the expansion of Euronext’s federal model since its IPO. ISE brings to Euronext leading global positions in debt, funds and ETF listings markets. As part of Euronext, ISE’s growth initiatives will be reinforced with Euronext’s full support. We are delighted to welcome Deirdre Somers and her team to Euronext. In addition to strengthening revenue profile and cost synergies, ISE is ideally positioned to benefit from market opportunities in a post‐Brexit environment. Within this environment, our unique federal model clearly demonstrates its added value through a single cross‐country liquidity pool, a single state‐of‐the‐art proprietary technology, a single rule book and a complete and diversified set of services, while maintaining strong local input within our balanced federal governance. This transaction demonstrates the strength of the Euronext “united in diversity” federal model.”
Deirdre Somers, CEO of the ISE, added: ”This is a landmark day in the 224‐year history of ISE and a great day for our customers and our people. This transaction recognises the significant value and leading market position that has been built by the ISE. More importantly, we believe that Euronext is the perfect partner to enable us to achieve our growth ambitions. Euronext is hugely complementary to the ISE, bringing valuable expertise, financial strength, global relationships and technological capability as well as a global brand. These will enable our business to build further on its track record of international achievement and capitalise on new market and product opportunities emerging in Europe.”