Pan-European exchange Euronext has beaten rival bids from Deutsche Boerse and the London Stock Exchange to take control of the London International Financial Futures and Options Exchange.
The Board of Liffe unanimously accepted Euronext's all-cash offer of £18.25 per share. The deal values Liffe at £550 million, a 112% premium to the pre-process share price.
Under the terms of the deal, London will become the European hub for Euronext’s derivatives business which will be migrated to the Liffe Connect electronic trading platform. Liffe's management team, led by chief executive Hugh Freedberg, will assume responsibility for all of Euronext’s derivatives business.
Freedberg acclaimed the deal as "the right result for Liffe and for London". He believes the transaction will be welcomed by shareholders and customers alike.
The decision caps five days of frenzied speculation about the outcome of the bidding war, which had pitted three of Europe's most powerful exchanges in a head-to-head contest for control of the London futures market. It marks a watershed moment for the London Stock Exchange, which was forced to supplement its initial all-cash offer with stock options as the price of buying Liffe spiralled. Failure to capture Liffe leaves the LSE looking increasingly vulnerable to takeover or merger proposals from its rivals on the continent and across the Atlantic.
In a statement, Liffe describes the Euronext business case as "clear, compelling and ambitious". Much of the attraction relates to the level of autonomy promised to London management, and the opportunites for extending the Liffe Connect platform to a wider customer base across Europe. It is understood that the LSE had proposed scrapping Connect in favour of a high-risk strategy to build a new integrated stock and futures trading system.
Liffe says that over time, it is expected that customers will be able to choose to clear transactions in multiple locations in multiple currencies
Sir Brian Williamson, Liffe’s chairman, comments: “This move continues our strategy to use technology to develop our business. After notable successes in New York and Tokyo, this adds a further dimension in the fast-developing European arena and is good for all users of derivatives markets.”