European stock exchange operators are poised to strike a flurry of M&A deals this year as they look to integrate the region’s capital markets and diversify their businesses. Exchange chiefs have recently talked up the potential for more acquisitions following a series of major deals last year.
Chief executive of Deutsche Borse, Stephan Leithner told reporters in December that the German exchange operator saw dealmaking as a key part of its growth strategy.
“We’ll financially be very disciplined on M&A”, he said. “I think we also see us clearly focusing on strengthening some of our fast-growing businesses and in that context we do have strong financial firepower, so we are not constrained.
In November, Deutsche Borse confirmed a non-binding, cash-and shares proposal to acquire European fund distribution platform All-funds for around 5.3 billion euros. It would be Deutsche Borse’s biggest acquisition ever, following its 3.9 billion euros deal for Danish investment management software company SimCorp in 2023.
“We are ready to act again” after integrating SimCorp, Leithner said. We have the right financial resources”.
With European IPO activity muted and an increasing share of equities trading taking place from exchanges, market operators have doubled down on fast-growing segments such as financial data, analytics and technology.
Meanwhile bourse owners have scaled up in recent years by consolidating Europe’s scattered national stock exchanges. Euronext, which accounts for about a quarter of European equities trading, completed a 413 million euros all-share acquisition of the Greek stock exchange in November.
It is Euronext’s fourth exchange takeover since 2018 and adds an eighth country to its network of bourses in Paris, Amsterdam, Dublin, Milan, Oslo Lisbon and Brussels. The firm has also made recent acquisitions in market data services, fintech and corporate solutions.
Euronext’s CEO, Stephane Boujnah, is set on further takeovers. “We continue to explore potential acquisitions both to diversify the revenue mix of Euronext and/or to consolidate market infrastructures in Europe”, he told reporters in November.
He said that he was interested in buying Nasdaq’s Nordics business and Spanish exchange group BME, as well as a “combination” with central securities depository Euroclear.
He has also signalled he could bid for the London Stock Exchange if it went up for sale. However, data and analytics-heavy parent company LSEG has fended off suggestions it should offload its flagship bourse, which now comprises just 5 per cent of the group’s revenue.
LSEG chief executive David Schwimmer said back in May that the FTSE 100 firm continued to “look at a lot” of M&A opportunities. Since joining LSEG from Goldman Sachs in 2018, Schwimmer has overseen several big-ticket acquisitions that have transformed the group’s business mix and geographical footprint.
The biggest deal by far has been LSEG’s $27 billion acquisition of data and analytics firm Refinitiv, which completed in 2021. Since then, it has made further purchases of companies including cloud-based tech provider Tora for $325 million and transaction risk firm Quantile for up to £274 million.
Last month, Bjorn Sibbern, who leads Swiss bourse operator SIX Group, said that he was on the lookout for more acquisitions. SIX, which snapped up BME for about 2.8 billion euros in 2020, completed a £225 million deal for London’s challenger stock exchange Aquis in July.
Sibbern has said future deals are likely to centre around SIX’s exiting main business areas: exchanges, securities services, financial information and banking services.
The prospect of further consolidation among European exchanges comes as EU policy makers push ahead with the Savings and Investment Union — a long-planned series of reforms designed to harmonise regulation across different jurisdictions and unlock around 10 trillion euros of EU retail savings parked in bank deposits.
Back in October, German Chancellor Friedrich Merz called for the creation of “a kind of European stock exchange” to counter a wave of homegrown companies listings in the US, where pools of capital are deeper.
Andy Jalil
The writer is our foreign correspondent based in the UK.
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