Payday for brokers as Irish Stock Exchange lands €158.8m Euronext deal

Deal allows both sides to position themselves for Brexit opportunities

The Irish Stock Exchange has been in business since 1793. Photograph: Dara Mac Dónaill

The Irish Stock Exchange has been in business since 1793. Photograph: Dara Mac Dónaill

 

A group of Irish stockbrokers are set to share €158.8 million through a deal to sell the Irish Stock Exchange (ISE) to Euronext, operator of the Paris, Amsterdam, Lisbon and Brussels bourses.

Euronext’s market value rose as much as 1.9 per cent to €3.49 billion in Paris on Wednesday after The Irish Times reported online that the pan-European bourse operator was close to a deal with the ISE.

The agreed deal, which was confirmed by both sides after European markets closed, includes a payment of €137 million for all of the ISE’s shares and the equivalent of €21.8 million, representing the company’s regulatory capital requirements.

The 224-year-old Irish company, which up until now has managed to avoid a wave of mergers and acquisitions among exchange operators over the past two decades, has been on the lookout for a strategic partner or buyer for some months as it seeks to position itself for opportunities after Brexit.

The deal comes three years after the ISE, led by chief executive Deirdre Somers, demutualised and split a €27.5 million windfall among its remaining founder members. Davy, the State’s largest stockbroker, has a 38 per cent stake in the bourse, while Goodbody Stockbrokers owns 26.7 per cent, Investec 18.5 per cent and Cantor Fitzgerald and Campbell O’Connor each hold 8.4 per cent.

The acquisition “will further strengthen Ireland’s position as a strong European anchor to take advantage of Brexit opportunities; and develop the Irish capital markets ecosystem within a European context and as part of Euronext’s core mission to power the real economy”, the ISE and Euronext said in the statement.

Overall valuation

Euronext was established in 2000 through the merger of the Paris, Brussels and Amsterdam stock exchanges, before going on two years later to absorb the Portuguese bourse. It also has operations in the UK.

Euronext was subsequently taken over by the New York Stock Exchange a decade ago in an €8 billion deal, while the combined entity, NYSE Euronext, was acquired by the Atlanta-based Intercontinental Exchange in 2013.

The European operation regained its independence in June 2014 when the business was floated following an initial public offering. Its chief executive, Stéphane Boujnah, has openly spoken of targeting acquisitions, with as much as €2 billion to spend, to boost its revenue base and double its size in the coming years.

The ISE’s position as a leading international hub for the listing of debt securities and funds has appealed particularly to Euronext, given the Amsterdam-headquartered group’s current dependence on the cash equities and derivatives businesses and ambition to diversify its income stream.

“ ISE to have a strong group-wide position within Euronext’s highly inclusive federal governance structure as a global centre of excellence for all group-wide activities in the listing of debt, funds and ETF (Exchange Traded Funds) securities,” the joint statement said on Wednesday.

It is understood that a key stipulation of the exiting shareholders has been that the buyer would not hollow out the Dublin operation. Deirdre Somers will continue to lead the Dublin company following the deal and head the group’s debt, funds and ETF listings business and join Euronext’s managing board.

“This is a landmark day in the 224-year history of ISE,” said Ms Somers. “This transaction recognises the significant value and leading market position that has been built by the ISE.”

The deal is expected to close in the first quarter of next year.