Pan-European exchange operator Euronext is to merge the activities of its IT joint venture AtosEuronext with Euronext.Liffe Market Solutions, the technology arm of its derivatives trading business.
The exchange says the project is in line with its strategy to rationalise its IT operations and will result in the creation of one of the largest exchange and clearing house technology service providers. The new joint venture has been approved by the Euronext supervisory board and launch is planned for the second half of this year.
AtosEuronext was formed as a 50/50 joint venture between Euronext and Atos Origin in 2000 and charged with managing internal software development and licensing the exchange's technology platforms NSC and Clearing 21 to third parties. Euronext.liffe Market Solutions performs much the same functions in the derivatives markets.
Further details of the planned merger, including equity ownership and staff rationalisation plans, have yet to be formalised.
News of the plans emerged as Euronext reported annual earnings of €240m, a 2.2% increase on 2003. Analysts were impressed by the results, which came in above expectations on the back of proactive cost management. This enabled the company to maintain expenses nearly flat despite €14.5 million of exceptional costs related to the completion of the derivatives migration in the fourth quarter of 2004 and multiple acquisitions by financial software subsidiary GL Trade.
Presenting the results, Jean-Francois Theodore, Euronext chief executive, confirmed that the Exchange is co-operating with Borsa Italiana, the Italian stock market, over a joint bid for electronic bond trading venture MTS. He declined to comment on Euronext's potential bid for the London Stock Exchange.
Rome-based MTS is understood to have received 17 distinct offers by the weekend, including bids from the Chicago Board of Trade, Icap, Thomson, and private equity firm Carlyle.
The firm, which has been valued at about €250 million, is currently drawing up a shortlist of bid candidates. Euronext, through its past history of joint ventures with MTS and its link-up with the Italian bourse, is considered a front-runner.