Euronext submits €5.5 billion bid for Allfunds

Euronext, Europe’s largest exchange operator, has made a bid for fund platform Allfunds as the takeover group continues its quest to build a capital markets empire.

Amsterdam-based Euronext has bid €8.75 per share for Allfunds, valuing the company at €5.5 billion. Shares in Allfunds rose as much as 29 percent to €9.45 after the offer was announced on Wednesday afternoon, while shares in Euronext fell 6 percent.

A successful takeover would be the latest deal for Euronext, which has acquired several exchange and market infrastructure companies in recent years under CEO Stéphane Boujnah. If agreed, Euronext would pay through a mix of cash and Euronext shares, Allfunds said.

The company helps connect fund management products with investors by charging buyers for access to its platform and sellers for listing their products, such as exchange-traded funds and mutual funds. It manages assets of more than 1.3 trillion euros and works with almost 3,000 fund groups, according to its website.

Euronext has announced it is in talks with private equity group Hellman & Friedman and French bank BNP Paribas over a potential deal. The two companies together own 46.4 percent of Allfunds stock. Other major shareholders are the Californian asset manager Capital Group and the British fund manager Jupiter Asset Management.

The offer surprised markets, with Euronext shares closing 7.4 percent lower on Wednesday.

“We are struggling to understand why the Allfunds board or major shareholders would accept this offer when the standalone fair value is arguably higher and Allfunds was trading at €18 as recently as August 2021,” Citi analysts said. They added that Euronext’s cash portion of the transaction would amount to 3.6 billion euros. “We are also struggling to understand how Euronext can bid [this cash consideration] without exceeding its own net debt/ebitda thresholds.”

Jefferies analysts said Euronext typically acquired companies in the public or post-trade sectors. “Although we hadn’t actively considered it as a possible acquirer of Allfunds. . .[the]Combination has the potential to be something of a cultural match,” they added.

Led by Boujnah, a former banker at Santander and Deutsche Bank, Euronext has grown into Europe’s largest stock exchange owner, operating the Amsterdam and Paris stock exchanges, among others. In recent years, the company has bought several market infrastructure companies and expanded to include a government bond trading venue and clearing house.

In 2021, Euronext bought Borsa Italiana from the London Stock Exchange Group for €4.4 billion in a deal that included Milan-based clearing house CC&G. Last month, Euronext said it was moving some of its clearing operations away from London and into its own Italian company in order to end its dependence on its British rival.

As part of a potential all-funds deal, Euronext would also pay an annual ticking fee of 5.5 percent to investors tendering their shares. That fee would be paid in cash, stock, or a mix of both, Allfunds said.