Euronext wins Liffe battle

Euronext has beaten its contenders in the bid for the London International Financial Futures and Options Exchange (Liffe). The GBP555 million cash bid has created an exit opportunity for US private equity firms, Battery Ventures and the Blackstone Group, which are set to make a healthy return of over three times the original amount invested.

The cash offer from Euronext values each Liffe share at GBP18.25, beating rival bids from the London Stock Exchange and Frankfurt’s Deutsche Borse.

Last year, Boston-based Battery Ventures and The Blackstone Group in New York each invested GBP23.2 million for approximately 7.7 million shares in the exchange. Both firms paid GBP6 a share for a 29 per cent stake, which included the option to increase the stake to 40 per cent at a price of GBP12 per share. The financing was used to accelerate the development of the exchange business and to exploit new e-commerce market opportunities.

Michael Brown of Battery Ventures said: “We have achieved what we wanted to achieve. With a top quality management team and excellent technology, we managed to turn this exchange around – Liffe that was almost on the brink of death. We couldn’t be happier with the outcome.”

The Euronext and Liffe union brings together two major players in the European derivatives exchange market. The derivatives business of Euronext will be placed under the Liffe umbrella, based in London and running on the Liffe Connect trading platform.

Sir Brian Williamson, Liffe chairman, said: “From its inception, Liffe has always endeavoured to be outward in aspect and international in character. 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.”

Liffe was established in 1982 and is divided into two separate businesses Liffe Exchange, an electronic marketplace for the trading of interest rate, equity-related and non-financial derivative products, and Liffe Market Solutions, the exchange’s technology division. Liffe was ranked second in Europe in 2000 with a total trading number of 131 million derivative contracts.

Jean-Francois Theodore, CEO of Euronext, said: “This historical step will strengthen and develop the derivatives business in Europe by creating a powerful market based on a highly professional management team, state of the art trading technology and a wide range of products.”

Euronext was created in September 2000 by the merger of the Amsterdam, Brussels and Paris stock exchanges. It is the first European cross-border exchange organisation for the trading of equities, bonds, derivatives and commodities.