Euronext says Irish Stock Exchange deal ‘key’ to further M&A

The chief executive of Euronext, the pan-European stock market operator, said on Monday that the group's deal late last year to buy the Irish Stock Exchange (ISE) was "absolutely key" for the group as it eyes another wave of consolidation across the industry.

Speaking on a call with analysts after Euronext reported full-year results, chief executive Stephane Boujnah said the group's first agreement to buy an exchange since its 2014 flotation would "send a clear message to independent exchanges in Europe willing to benefit from our single liquidity pool and proprietary technology platform".

Euronext, established in 2000 through the merger of the Paris, Brussels and Amsterdam exchanges before taking over the Lisbon bourse two years later, reached a deal in late November to buy the ISE, led by chief executive Deirdre Somers, in a deal worth €158.8 million.

Large payday

The deal, expected to close in March, will deliver a large payday for the ISE's owners, Davy, Goodbody Stockbrokers, Investec, Cantor Fitzgerald and Campbell O'Connor.

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The Euronext group had been taken over by the New York Stock Exchange more than a decade ago in a €8 billion deal, before the combined entity, NYSE Euronext, was acquired by Atlanta-based Intercontinental Exchange in 2013.

However, the European operation regained its independence in June 2014 when the business was floated following an initial public offering.

Euronext reported on Monday that its revenues increased by 7.2 per cent last year to €532.3 million, outpacing a 4.9 per cent increase in earnings before interest, tax, depreciation and amortisation, as the cost of new European market regulations and investment in projects squeezed margins.

Diversify

Mr Boujnah said that the ISE will help to diversify the group’s earnings, given the Dublin-based firm’s market-leading positions in the listing of funds and debt securities. He reiterated that Euronext aims to extract €6 million of cost savings from the ISE deal by 2020, mainly through the optimisation of information technology systems.

The Euronext chief executive signalled to reporters in Dublin in November that some of the 135 roles in the ISE may move to elsewhere in the group. However, he said that the Irish business, which is set to become Euronext’s global hub for debt and fund listings, may also benefit from the creation of new positions.