Euronext in exclusive talks to buy LCH's French operations

A photo taken on August 25, 2015 shows the logo of European stock market operator Euronext and the new headquarters in the La Defense business district, near Paris


Announcing the exclusive talks in a December 20 statement, Euronext said there was “no certainty” of agreeing a deal, a point reiterated in separate statements by the LSE and Deutsche Börse.

A deal to sell LCH SA would be conditional on the merger between Deutsche Börse and the LSE making it past the European Commission and other regulatory hurdles.

“Any potential sale of LCH SA would be subject to the review and approval by the European Commission in connection with the recommended merger of LSEG and Deutsche Börse AG,” the LSE said in a statement.

The LSE put LCH SA up for sale in September after the European Union’s executive arm opened an in-depth investigation into the UK exchange’s planned merger with Germany rival Deutsche Börse.

The Commission initiated an in-depth review of the merger on September 28. Earlier this month, the Commission narrowed its review to focus on whether a combination of the LSE and Deutsche Börse would give the pair too much control over derivatives clearing.

In its initial review, the Commission raised preliminary concerns in six main areas: clearing; derivatives; repurchasing, or repo, agreements; German stocks; exchange-traded products; and other sectors including interdealer electronic trading of German government bonds and regulatory and trade reporting.

Euronext does not own a clearing house and relies on LCH SA as its clearing provider. Its contract with LCH SA is set to expire in 2018.

On December 15, Euronext said it had completed the acquisition of a 20% stake in cash equities clearer EuroCCP.

Euronext was seen as “the natural buyer” of LCH SA by analysts at Kempen & Co in a September 29 note.

No financial details were disclosed on December 20.

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