Street View: Euronext-Allfunds deal 'interesting' but shareholders' bar has shifted higher

Allfunds

01/03/2023 11:16

** Just a week after confirming the offer, Euronext  ENX.PA 
dropped out of talks to take over Allfunds  ALLFG.AS , with the
latter deeming the offer "inadequate", while Euronext did not
name any official reason
    ** The exchange operator shares rise about 6%, while the
Amsterdam-listed firm drops almost 14%
    
    THE BAR HAS SHIFTED HIGHER
   ** By dropping the deal, Euronext supports its reputation of
financial discipline, analysts say, but at the same time they
ask "what next?"
   ** ING says the deal could or could not have been value
accretive for Euronext as it relied on a significant re-rating
of the business combination
    ** The European exchange operator is running out of easily
acquired targets, ING adds, while KBC, even if it sees Allfunds'
attractiveness, would prefer to see an acquisition of this size
in a Borsa Italiana-like geographical footprint
    ** Jefferies says Allfunds deal did not share many similar
hallmarks to Euronext previous transactions marked by
"(over)delivery on cost synergies"
    ** "(Euronext) may find that the (shareholders') bar (for
acquisitions) — in terms of strategic merit and acceptable
financial return hurdles — has now shifted higher" - Jefferies
    ** Nevertheless, Allfunds remains a structurally attractive
asset, Jefferies says, while Citigroup, who says the deal would
have been an interesting move for Euronext, ponders if the talks
failure will "(shake) any other parties out of the wood work"
    ** Jefferies says competitor Deutsche Boerse  DB1Gn.DE , "by
virtue of doing nothing ... comes out on top from this episode,"
adding the German operator could yet come back for Allfunds 

 (Reporting by Piotr Lipinski)
 ((piotr.lipinski@tr.com))