Newscasts - Europe’s corporate desertion

Flutter Entertainment

29/01/2026 06:54

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Description: Some $1 trln of continental companies could follow peers and migrate from domestic bourses to New York’s. In this Viewsroom debate, Breakingviews columnists discuss whether they can be lured back, or if deeper causes are at work.

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Video Transcript:

The views expressed on this podcast are those of the participants, not of Reuters News.

European companies have turned into a $1 trillion flight risk. In the past couple of years, there has been a steady trickle of companies, like gambling firm Flutter and material group CRH, that have moved their listings stateside. The reasons are often varied, but there is one thing that they have in common, which is a reliance on the US for their earnings. And unfortunately for European politicians and stock exchanges, there's plenty more where that came from. What this all means, and a look at the firms that are likely to move too, is the focus of this week's Viewsroom. It's Aimee.

And it's Jonathan, and this is the Viewsroom, your weekly podcast diving into the knottiest issues in business, finance, and economics. And, Aimee, sort of less knotty from where I'm sitting because I'm based in New York City, New York has been the traditional winner of this transatlantic movement in company listings. And I think it feels quite indicative of just how far the momentum has shifted that really, when you think about and talk to people about the greatest, like most imminent threat to New York's pre-eminence, people will begin pointing at like this effort in Texas to set up a kind of new parallel financial system. It's stuff like within the US, maybe there's stuff about like, okay, what's happened to like China-US listing flow because of the trade war and so on. But it doesn't really feel like the trend of European companies looking towards the US has been destabilized by anything until, I don't know, maybe we see politics step into the middle or something like that, right?

I know we have this kind of conversation sometimes when these company news stories come up and you know one company is talking about moving their listing or maybe isn't quite moving their listing like AstraZeneca for example, was doing some things with its own listing in the US and it would just kind of started this conversation about whether one of the biggest listed companies in the UK would move and what that would mean. And you could think that it doesn't mean anything, that actually these companies are still headquartered in Europe, they still employ thousands of people, they still sell lots of their products in Europe. But I suppose what we have often thought is that it does matter in that if they move to the US and then they move their headquarters and a lot of their legal structures turn there, that the sort of center of gravity moves with them. And that is one of the things that we discuss. We're going to do a trigger warning for Liam because we will talk about valuations and whether that matters. But yes, let's bring in Liam Proud, who has- I think he's covered this more than we have, Jonathan, but I think we've all looked at this. So, this is why there's no real host, there's no real guest, but Liam is obviously our guest. Liam Proud, who is an associate editor in London. And yes, has, as I said, has written amazing things about this trend. So, Liam, you are very welcome.

Thanks for the trigger warning.

So, as I said, you have been looking at this the longest. When did you start to notice maybe a more intense trickle of firms moving from Europe to the US? When did you start to kind of think that that was becoming a more pronounced trend?

So, I don't want to pretend that I can give a comprehensive history of this thing but, I mean, there's long been a phenomenon of companies that grew up in Europe, listing their shares in New York, right? It happened with Spotify. This was before the whole like actually "moving your listing" happened. It happened as a company called "NXP Semiconductors", which used to be part of Philips and does a lot of kind of car industry chipmaking. But I think the first one that I can remember that was already listed in a European company and then picked its listing up and moved it was Ferguson, which sort of happened- I think it was in the works just before the pandemic and then happened kind of 2020, 2021 sort of era. And that was a kind of- there was an activist involved and there was a valuation discount. And some people were wondering whether it's because this thing was listed in London. And then after that, you saw this kind of trickle turn into what increasingly feels like a flood. So, the data points straight after that were CRH, which is a big building materials company. There was Ashtead, which does kind of equipment rentals. Flutter, which owns DraftKings is probably the- sorry, it owns FanDuel.

It was a gambling firm, right, Liam?

Yes.

Yes.

It owns FanDuel which is the kind of sports betting group. And you've had a lot of it- Carnival, which is a cruise line; Wise, formerly known as "TransferWise", which is a fintech. And it really feels like it's something that's got momentum I think in the past two or three years, which also happens to be the time in which if you just look at the valuation multiples in Europe versus those in the US, the gap has kind of broadened and that's kind of fed a lot the narrative behind this. And it's something people get very angsty about in London, Frankfurt, Paris, and other European capitals.

It's funny, I want to pick that apart on a relative and absolute basis, because like you say, the argument seems to be just sitting over here from a very simplistic thing. It's like, here's one weird trick to boost your valuation. And everybody expects to get a few turns of multiple by moving over to New York. And then, of course, like on a relative basis over the past year, right, like New York exchanges have underperformed kind of international exchanges, especially Germany, et cetera. I'm kind of curious for both of your take on how real the transatlantic earnings valuation boost is.

This is where Aimee's trigger warning comes in. I get very triggered for some reason when people imply-

Gets very exercised, very exercised.

Yes, people imply that you can just relist shares elsewhere and magically conjure up a new valuation multiple. I mean, I don't think it's real. I think the evidence suggests that it's not real. And I think if you actually look at what the companies who have done this have said, while a lot of the sort of chatter around it has been about valuations, more often than not, it's been companies that are overwhelmingly American in terms of their revenue and their operations and in terms of their decision-making center of power. So actually, moving the listing was kind of remedying a weird historical anomaly. Often, it would be- it was once a European group, maybe it had a very good US operation, ended up selling some of the underperforming US stuff, still had this European listing, but was essentially to all intents and purposes an American company. And you just say, "Well, doesn't make any sense. Let's just like move it over." So just specifically on your point about valuation, I mean, what would you need to believe to think that you could conjure up a higher valuation multiple just by changing the listing? You would need to believe that capital markets are so inefficient and un-globalized that no one has noticed that you could get an extra kind of two or three percentage points of like earnings or cash flow yield just by buying a company that happens to be listed in the Netherlands or UK or Spain or something. It doesn't check out. You look at the shareholder registers of all big a hundred billion dollar plus European companies. There's a lot of American investors there. There's nothing stopping American investors from buying shares in UK-listed companies, for example.

Wait, can I play devil's advocate on this one first?

Sorry, go on. Please, please.

I also would like to play devil's advocate, but you first, Jonathan.

Okay, you've got two devils facing you down right now, Liam, so here we go, or at least they're advocates. So, you say, okay, so somebody would actively have to not notice that effectively this arbitrage is available, right?

Yes.

If you talk to hedge funders, et cetera, so on, the lament for the past 10, 15, whatever, years is that there are no people actively looking at things. There's a bunch of dumb money out there sitting in passive vehicles that all peg to indexes. And that getting over into the US, you can potentially, especially if you're in like the kind of larger end of the corporate size bucket, you can maybe get into some of these indices and that that means you're going to get some of these just unthinking mechanical flows coming from some of those funds. Like is that not- because we see people like try to game out index inclusion all the time, right? There is clearly some value in it.

I agree. I think that's the best form of this argument. When it's made in that way, that's the only way that makes sense to me. But then I think generally, it's less of a geographical argument and it's more of a S&P 500 versus not S&P 500. I mean, obviously that is an American index, but you could equally say the same thing as you said about companies within the States ending up in the S&P 500. There is clearly something there. It's whatever 40% of money is passive and it's just you end up getting these forced flows. People have to buy your stock because it's in the S&P 500. One nuance that I would push back to you on that is a lot of the time, people or CEOs and boardrooms talk about relisting their stock and not moving the headquarters. If you don't have a lot of decision-making, center of gravity in the States, it's actually really hard to get included in the S&P 500. So, I will accept that maybe there's some incremental-

Yes, I think Brookfield found this out, right?

Totally. So, I'm sure there's some incremental flow benefit, but I don't think, it's not going to give you three or four turns of multiple. It's definitely not going to give three to four turns of multiple if you're like Total or Shell and you still keep the HQ in London, which would have been the idea. Sorry, Aimee, I didn't mean to speak over you.

No, no, there's another small element of this, and this is very small. But something that I have noticed as well is like if you're in a country, so your domestic investors, your retail investors, let's say, are they more likely to buy like the biggest listed company in that country? So, for example, it'll get a lot more press coverage- AstraZeneca will in the UK. Novo Nordisk has a very large amount of Danish retail investors actually that buy into it. So, I just sort of wonder to what extent there's a bit of that. And I agree with you, it's not going to be in multiples of turns of valuation or anything, but just that you do get these sorts of fringe benefits as well of being in a certain country. And is that what politicians think as well?

Yes, obviously I can't deny that retail flows have an effect on valuations given everything we've seen in the past two or three years from GameStop onwards. But, I mean, is that going to make a difference to 99.9% of companies? Like, I don't think so. And I mean, again, not to sort of sound like a broken record but your- in certain narrow cases where a stock becomes a kind of cultural phenomenon on Reddit or something, it does seem to be that the retail kind of fervor can defy gravity indefinitely. And that just does seem to empirically be the case. That's not something we thought was the case about finance 10 years ago, but it does just seem to be the case if you're like GameStop or AMC or something. But, you know, generally, I think in the totality of these things, you know, the way the textbook tells you this works is that if there is some behavioral kind of reason or sort of technical reason why people end up overallocated to a certain geography, that creates an opportunity. Where if someone's over allocated somewhere, then someone's under allocated somewhere else, and therefore, you can get more earnings per dollar of money that you put to work in that thing, more dividends, more free cash flow. So, you really have to do a lot of tearing up and burning of the textbook to make this theory work. I mean, I was going to make an argument about some numbers as well, but you can see I'm triggered. So, I'm going to slow myself down for a second.

No, no, no. I mean, we looked- I wrote a piece, Liam, you edited it. So, we went through a big list of companies that had revenue of kind of over I think our threshold was like 40% to 50%, in the US. And we really did see that that trend seemed to really influence a lot of the companies we had already seen, that either their earnings or their revenue was vastly skewed towards the US and that that does seem to be a factor which we can get to, but the other element you've written about this before, Liam, right, which is the CEO pay, right, or executive pay, and to what extent that is a lure for these companies going to the US.

Yes, so, I mean, this was prompted by just some chats with equity capital market bankers and a few sorts of board directors who have been involved in these sorts of chats. And what they- this was last year, what they were telling us was very clearly, you know everyone talks about valuation, everyone talks about S&P, everyone talks about you know retail money and liquidity and stuff. But you know the thing that takes up 30% of a board's airtime when you're talking about relisting from Europe to the US is CEO pay, and the numbers are pretty stark. It's like median CEO pay in the FTSE 100, which is quite high by European standards, is single digit- mid-single digit millions a year, and it would be closer to GBP10 million to GBP20 million in the S&P per year. So that's a real arbitrage, and you can see that empirically. One number I liked when we looked at it was- so Flutter, which is one of the companies that has done this. Its CEO, Peter Jackson, got paid less than the chief legal officer at DraftKings, which was the US comp. So, I mean, that is clear. And you'd have to be incredibly naive to think that that doesn't have an influence on some of these decisions. But really, what these companies have been doing, and it will be different if some of these more European companies start listing, but they've essentially been American companies with American operations, American 50% plus revenue saying, "Let's just align the listing with that because it's a bit strange not to." And I thought what was really unique and interesting about what you did, Aimee, is put the valuation stuff to one side, even put the CEO pay stuff to one side. Just say, well, how many European companies are basically American at this point? And it turns out it's about a trillion of market cap, which is pretty scary if you care about this kind of thing from a European perspective.

It's interesting putting that all together because the one thing we haven't really mentioned here yet is, I don't know if anyone's noticed, but there's something of a trade war brewing. We had a lot of stuff coming off of the World Economic Forum in Davos. You had Macron talking about the need to deepen European capital markets and essentially nurture a greater ability to use European savings to fund European projects. I know in the United Kingdom - the United Kingdom - I know in the UK, this has also been a topic of conversation. And there's a lot of fear of, okay, if bourses kind of thin out, there isn't a lot of really big juicy kind of listings over in Europe, you sort of hollow out the culture of retail and institutional investment in home markets, and this just further builds the US advantage, which has already compounded by having the dominant tech companies at a time when capital raising activity is focusing a lot around the dominant tech companies and so on. So, there's a kind of negative flywheel in effect, I think is sort of like the case for caring about this, right? And just curious for both of you, I mean, you've gone through this list. Does it feel like this matters? Like, is this something that European governments should be freaked out about?

I think for some companies, I think it seems very unlikely to think that they would move to the States for a list, excuse me, even a listing. So, Novo Nordisk would be a good example. It's one of its biggest shareholders is a foundation that's set up in Denmark. I think, it's very much like tied to that, to that country. There are others where like a government has a stake in that company, which, again, would make it quite difficult I think for those. But there are plenty of companies that are not in that situation. And there is this kind of push-pull between the executives saying, "We want to be in the US where all of our revenue is. We think we might even get some benefits" I mean, if you think about CRH, the building material company, maybe they might get more government contracts if they're US listed. I'm not saying that they do, but that is sort of a question. So, I think that there- to some extent, I don't think CEOs necessarily need to listen to prime ministers or presidents who say, "We don't think you should go." So, AstraZeneca is a good example. They have not yet left, but they have done a sort of situation where they have- they do now have a listing in the US, they have the ability for investors to buy shares in the US. And a lot of people think that that is like a precursor to them leaving. And we know that Keir Starmer, the Prime Minister of the UK, had a meeting with Pascal Soriot. We know that he is trying to get them to stay. He obviously thinks that that's important, but to what extent he can stop them, I think I certainly I don't think it's very powerful- what they're trying to get- how they will try and get them to stay, I don't know how many powerful forces they have to do that.

Yes, I think it's a great question. I agree with everything Aimee said. I think it matters, but probably not as much as, for example, some UK government ministers seem to think that it matters. They have been bending over backwards for years now to try and get companies like Arm, which is listed in New York in the end, to try to get companies like Revolut, which isn't listed, but looks like it probably won't list in London, if it does list, the fintech.

SHEIN.

They've been trying again to list in London. SHEIN, which has also not ended up listing. It goes right back to Saudi Aramco as well, the Saudi state oil company, there was talk of creating a special subcategory of UK listings in order to accommodate this company. They really care- and you see all this kind of slightly embarrassing things like UK Treasury ministers putting quotes on the IPO documents of like- I think I did that on Deliveroo.

Revolut.

I'm sure they'll do that if Revolut-

Sorry, it wasn't Revolut, it was Deliveroo. It was Deliveroo.

And then, which is just hilarious when the thing then goes down like 70% or whatever, I'm making the numbers up, but it's kind of, are you endorsing this thing? Like, what's going on there? But it so does matter, there's some share trading taxes that are location based, I'm sure you're right, Jonathan, there is a kind of flywheel effect. I'm sure that there is some margin of an economic hit because you have fewer equity capital markets bankers. Fewer brokers, fewer sort of the equity trading and the advice and the legal fees kind of tend to follow the listing, I think. I don't think it's like seismic. I tell you what, it does matter to financial journalists, because we think we tend to divide up coverage partly based on where the stock is listed, because that's when the things- but just want one more point to make. Does it matter to shareholders? I think that's a key thing that often kind of gets forgotten in all this. We sort of flicked it at beginning. There's, I mean my kind of research suggests not. Like if you look at CRH, for example, did it rerate relative to its American peers after it moved the listing? It rerated, but so did the American peers. So, in relative terms, it didn't rerate at all. TransferWise, which is now called "Wise", which is a kind of UK money-changing fintech, is moving its list- its primary listing from London to New York. It already traded at a premium to the key American listed comp called "Remitly". So, it doesn't seem like valuation's relevant there. New Financial, which is a think tank based in London, which has done a lot of work on this, they tracked the returns, the share price returns of the companies that have listed after they listed. And it turns out, according to their analysis, that the companies have moved then underperformed the European indexes that they were previously a part of. So, I think that tells me that all of this stuff about relisting the stock and getting a magical turn or two of P/E multiple is largely nonsense.

So, I suppose I'm sort of curious, Jonathan and Liam, because you're on both other ends of this, right? So, Liam's in the UK; Jonathan, you're in the US. Is there anything, Liam, do you think that Europe could do to make itself more attractive? Or is this really just about being where your identity is, which is where your US revenues are?

I think it would probably make a difference on the margin if they did something with some of the local share trading taxes, like stamp duty. I'm not sure they should do that, but if you decided that this was the only thing that mattered to you from a policy perspective, there are levers you could pull. I mean, I don't know, I'm sort of curious how important this seems like, do people in New York kind of ever talk about this, Jonathan? Are people like, "Oh great, there's another listing we've stolen from Europe? Or is this like, so far, down the list of things to worry about that, who cares? Maybe Universal Music will relist one day. Maybe it won't. We've got NVIDIA.

Yes, I think, as with so many things in New York, its assumed pre-eminence blots out any talk of potential threats. And look, over the long term, there will be threats. You see this- I don't want to be sort of glib here and just point to the long course of human history and the history of the corporation and the center of gravity and whatnot, but stuff does move around over time. And I think my personal hunch is that listings will follow wherever capital formation or business activity is moving to and specifically where those kind of very capital hungry, high return, attractive opportunities are. And right now, you have the AI cycle whirring pretty fast over in the United States. It doesn't strike me that there's some fundamental reason why there would be a big phase shift in where listings are going just because, like Aimee has been saying, the sort of a second order effect of just where the activity is. So, I don't know, it's definitely- I don't think there's any concern or hunger about, oh, we have to actively hunt these- I mean, I'm sure, look, to be clear, sure, Intercontinental Exchange, the owner of the New York Stock Exchange and NASDAQ, I am sure that they are very happy to get every new listing and I am that they compete hard for every new listing. This is their business. But in a sort of grander sense, I don't think everybody is sitting around, office towers in midtown watching a big stack counter on the wall of listed companies in New York. Maybe they should, maybe this Texas thing turns out to be real and there's like intra-domestic competition, but I don't know, it just doesn't feel like something that's a, an existential issue for anyone.

Does it have an element as well of like, you know, we're talking about listings here and really the big trend is whatever country you're in, you're in the long-term decline of listings relative to kind of you know private equity and privately owned companies, and you know VC backed companies not going public as early as they can. There is an element here of you fighting over the crumbs of this sort of like listed sort of rump, I don't know, that's maybe a bit dramatic, but it does seem to miss the bigger picture a little bit sometimes, this discussion.

I think that's right. And I also think that one thing that really kind of stood out when I was looking at all of the data is that it's some of the companies, which is why it adds up to a trillion, are really big. The companies that could move listings, they are some of the larger ones. And you're right, if you're not getting those smaller ones coming in and becoming these big ones, then I suppose that is an issue too. But either way, it looks like there's more of this to come and plenty more to chat about. So, we'll thank the three of us for our contribution to this conversation.

Well, you were great. Thank you so much for joining us, Liam.

Absolute pleasure. See you again.

Thanks for tuning in. This podcast was produced by Sheryl Pena in New York and Gregory Garner in Toronto. You can listen to a new episode of the Viewsroom every Thursday on the Reuters app or your favorite platform. And don't forget to tune in to our sister podcast, The Big View, every Tuesday, as well as the other great podcasts from the Reuters team. If you like what you heard, please follow the Viewsroom and let us know what you thought. We have a new email address where you can send feedback, which is breakingviews-podcasts@tr.com. And check out our views on the biggest stories in business and finance every day on Breakingviews.com and Reuters.com.