London Stock Exchange Group (LSE) is to buy a 4.92% stake in settlement house Euroclear for 278.5 million euros (£241.9 million), as the bourse looks to expand its influence in Europe.
The acquisition will be funded from existing cash and debt facilities and will see LSE take a set on Euroclear’s board.
Belgian-based Euroclear provides settlement, custody and collateral management services across Europe and has more than 28.2 trillion euro (£24.5 trillion) assets under custody.
The deal comes just over a month away from Britain’s departure from the European Union on March 29. Brexit threatens to take business away from the LSE, including clearing derivatives trades for EU clients.
The LSE said the minority stake is expected to strengthen LSE and Euroclear’s “existing operational and commercial relationship” and provide opportunities for the companies to “deliver benefits to their customers through commercial collaboration and product development”.
LSE also expects that its adjusted net debt to earnings before interest, taxation, depreciation and amortisation (EBITDA) ratio will remain within its target range following completion of the deal.
Chief executive David Schwimmer said: “We are delighted to become a shareholder of Euroclear, with which we have a long-standing operational and commercial relationship.
He added that both companies “share the same open access philosophy and a customer partnership approach which is central to our businesses”.
“We look forward to working with Euroclear to drive continued innovation and efficiencies for the benefit of our customers and the wider market.”
