LSE buys Borsa; Icap keen to buy Borsa''s electronic bond market

25 June 2007

LSE and the Borsa Italiana have confirmed in a joint statement that the London Stock Exchange (LSE) will buy its Italian equivalent, Milan''s Borsa Italiana, for more than €1.5 billion. The deal had been finalised on Friday.

Shareholders in the Milan stock exchange will be offered just under five shares of the LSE for each ordinary share in Borsa Italiana. The new board will have seven British members and five Italian members.

This deal comes just over a month after the completion of the New York Stock Exchange''s takeover of Euronext, which controls the stock markets of Paris, Amsterdam, Brussels and Lisbon.

The merger was welcomed by the Bank of Italy and by Italian business and political leaders who described it as very beneficial for Italy.

Mario Draghi, governor, Bank of Italy, who had had privatised the Borsa Italiana 10 years ago, said the merger with the LSE would bring the Italian stock market out of its isolation.

The deal has still to be confirmed by shareholders but if it goes ahead it will strengthen confidence in Italian business in European markets.

In an un-related development, Icap, the world''s largest money-broking firm, is keen to buy MTS, an electronic bond-trading market owned by Borsa Italiana. However, analysts say it is unlikely that the LSE would agree to sell the bond market, which would help it diversify away from share trading.