Euronext makes $712m all cash bid to buy Norway’s prominent venue Oslo Bors
The major electronic stock exchanges are mopping up their peers and looking at increasing their investor and trader base. Today’s bid by Euronext to buy Oslo Bors is no exception. Are we ready for multi-asset competition?
Euronext may well have its roots in the fairly innocuous Dutch capital city of Amsterdam, hardly a commercial center synonymous with large electronic trading or listed derivatives exchanges, but its might must not be underestimated as the pan-European electronic trading venue has aspirations far beyond its initial establishment which was less than 20 years ago.
Since its founding in October 2000, Euronext has expanded across not only geographic trading hubs but also across other sectors of the electronically traded capital markets business including the OTC FX sector.
Today, the firm makes a further step in its quest for domination on the European side of the Atlantic by making a $712 million (625 million Euro) all cash bid to buy Norway’s prominent derivatives exchange and major stock market, Oslo Bors, putting the European company right into the frame for competition with Chicago-based long-term giants ICE and CME Group as globalized multi-asset executing venues of scale.
Euronext, which already owns stock markets in Dublin and Paris as well as its home city of Amsterdam, merged with NYSE Group, Inc. on April 4, 2007 to form NYSE Euronext (NYX). On November 13, 2013 Intercontinental Exchange (NYSE: ICE), completed acquisition of NYSE Euronext. In June 2014 Euronext completed an initial public offering making it a standalone company again and now a worthy transatlantic competitor for its former owner.
Euronext approached the board of Oslo Bors during the course of this weekend after securing the backing of 49.6% of the firm’s shareholders to proceed with the bid, an activity which was confirmed this morning by Euronext CEO Stephane Boujnah.
The company is offering 145 Norwegian kroner ($16.53) apiece for the remaining shares. That’s a premium of 32% over the December 17 closing price. Speaking publicly this morning, Mr Boujnah said that the planned purchase of Oslo Bors wouldn’t prevent Euronext from making further acquisitions. “We can still raise a little bit more debt,” he said. “Let’s see after one year” he said.
Euronext has had its eyes firmly on the OTC derivatives market, and rather like many exchanges, is beginning to conduct strategic mergers and acquisitions in order to gain back some of the retail FX and retail equities business that the OTC derivatives industry has extremely effectively provided for over the past two decades, leaving exchanges bereft and considered by many retail traders to be slow, expensive and ineffective compared to the sophisticated retail OTC platforms and their respective prime of prime brokerages that exist today.
On this basis, Euronext bought into FastMatch in May 2017, by acquiring FXCM’s stake in the firm as part of FXCM’s to dispose of its non-core businesses. According to FXCM Group’s announcement issued back then, FXCM would receive approximately $55.6 million for its interest in FastMatch, with a portion held in escrow and subject to certain future adjustments including a share of a $10 million earnout if certain performance targets of FastMatch are met.
Very soon after its acquisition of FXCM’s share, Euronext increased its share to 97.3% in FastMatch, which is a highly profitable non-bank market maker and ECN that had come into existence as a joint venture between FXCM and Credit Suisse. This placed Euronext in the same position as Deutsche Boerse, which has been rapidly increasing its interest in OTC markets by buying 360T just a year prior.
Whilst largely ignored by the OTC derivatives sector, the continual sharpening of the corporate arrow by the largest lobbyists in the electronic trading industry – the stock exchanges – is something that we can keep an eye on.
Large scale attempts at monopolizing the margin business may well have been very sensibly thwarted by governments, banks and regulators alike, however the incremental mergers and acquisitions that are occurring are creating vast giants which can easily compete in the retail markets and pick up international investors.