Switzerland's stock exchange is putting up $3.1 billion in cash to buy Madrid's bourse. The move aims to build the third-largest trading venue in Europe, after Euronext and the London Stock Exchange.
The Swiss stock exchange SIX is plopping down 2.8 billion euros ($3.1 billion) in cash to buy Madrid-based BME, as the Bolsas y Mercados Españoles is known, SIX said in a statement on Monday. The Spanish exchange has agreed to a 34 euro per share offer by SIX, which represents a nearly 50 percent premium on BME's closing on Friday at 25.40 euros.
The deal, which is backed by BME's board and management, pits Switzerland in a takeover battle against Euronext: Europe's largest trading venue also wants the Madrid bourse, it said in a statement on Monday before the Swiss offer was disclosed. A spokeswoman for Euronext wasn't immediately available for comment.
Cross-Selling Services
SIX is proposing a takeover based on bolstering both venues' revenue, not on job cuts or other efficiency measures, it said. «A combination with BME will bring direct and immediate benefits to the stakeholders of both our institutions, at a time when consolidation in global financial markets infrastructure is accelerating,» SIX Chairman Romeo Lacher said.
«This is in line with SIX’s growth strategy and our commitment to serve customers with highly reliable infrastructure services and seamless access to capital markets.» Specifically, SIX has a financial information unit and is developing a digital exchange which it wants to expand to BME's clients.
In turn, the BME is strong in fixed income, which presents a cross-selling opportunity for Swiss customers. SIX CEO Jos Dijsselhof, who didn't comment on the competition from Euronext for BME, signaled SIX and BME would maintain their own pricing models if the deal comes to fruition.
EU Impasse
The Swiss market is at an impasse with the European Union after the bloc revoked access to the wider market. The Swiss government retaliated by ordering Swiss shares to be traded in Zurich only. On Monday, SIX's boss Jos Dijsselhof denied the BME move was a means to get EU access.
The Dutch-born executive said he believed SIX's takeover bid would neither harden nor soften the EU's stance to Switzerland. «We think full equivalency is best for investors, with the opportunity to invest across different venues – something they don’t have now,» Dijsselhof said on a media call.
Disposal Proceeds
The Swiss exchange, flush with cash since disposing of a majority stake in its payments arm to French rival Worldline last year, said it would finance the deal an equity-collar hedge worth 500 million euros stemming from the deal. SIX has also clinched bridge financing from Credit Suisse, which along with UBS is its main shareholder.
Both SIX and BME will keep their independence for now, as well as their management. The move comes as Lacher hands over to Thomas Wellauer, the third SIX chairman in four years, as finews.com reported two weeks ago. SIX is member-owned and governed: its board is stocked with bankers like UBS operating chief Sabine Keller-Busse and E. Gutzwiller & Cie partner Lorenz von Habsburg Lothringen.
