The London Stock Exchange Group has begun discussions to sell some or all of its Italian assets in an effort to secure regulators’ approval for its blockbuster $27bn purchase of data and trading group Refinitiv.
The company said on Friday it was considering selling MTS, its Italian bond trading venue, or even the unit’s parent, Borsa Italiana, the owner of the Milan exchange.
The disposal of either may satisfy one of the four concerns raised by EU antitrust regulators, who last month started an in-depth investigation into a deal they feared could lead to the combined company having too dominant a position in some markets as well as in the distribution of data.
Struck almost a year ago and applauded by LSE shareholders, the acquisition of Refinitiv would transform the exchange operator into one of the biggest global players in market infrastructure, with operations spanning trading venues, clearing houses and the distribution of data.
In a statement, the LSE cautioned that there was no certainty it would sell either business but chief executive David Schwimmer said there could be “potential benefits” to disposing of Borsa Italiana and MTS together.
The value of bonds traded on MTS surged in the first half of the year despite the severe market dislocations caused by the coronavirus, the LSE said on Friday.
Shares in the LSE rose 2 per cent to £85.20, close to the all-time high it hit in February.
The LSE’s Italian business, bought for €1.6bn in 2007, is regarded as key financial infrastructure in Italy. For several months, politicians have been discussing whether to make a bid for them, using state lender Cassa Depositi e Prestiti.
Speculation was fanned last month after Brussels raised serious concerns the Refinitiv deal would give the combined company too much sway in the electronic trading of sovereign bonds in the EU.
It brings together MTS and Tradeweb, a rival bond trading platform in which Refinitiv holds a 54 per cent economic interest. Analysts at UBS have calculated the two businesses would have a combined market share of 46 per cent. The LSE holds a 62 per cent stake in MTS via Borsa Italiana, with a consortium of banks holding the rest.
The Five Star movement, the senior party in Italy’s coalition, on Friday called on the government to buy the assets.
“We cannot be caught off guard and it is of pivotal importance the government works to develop an Italian proposal involving [state-owned investor] Cassa Depositi e Prestiti and a pool of banks to ensure our national interest is safeguarded,” said Davide Zanichelli, a lawmaker for the Five Star.
Euronext, which operates six equity exchanges across the continent including Paris and Amsterdam, has also previously expressed an interest in Borsa Italiana.
Alongside disclosing the possible sale of its Italian business, the LSE said on Friday that it had received clearance from US competition authorities and expected the Refinitiv deal to close either at the end of the year or in early 2021.
Regulators in Brussels have until the end of October to rule on the deal, although that deadline is expected to be pushed back after authorities paused their investigation two weeks ago.
First-half results from the LSE showed revenue rose 4 per cent to £1.06bn, due to increased demand for data and clearing. It increased its interim dividend 16 per cent to 23.3p.
Additional reporting by Silvia Sciorilli Borrelli in Milan
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