World Markets

Euronext offers 510 million euros for LSE's French clearing business

Reuters with CNBC
A visitor passes a sign on the wall inside the offices of the NYSE Euronext exchange in London.
Chris Ratcliffe | Bloomberg | Getty Images

Euronext said it has offered 510 million euros ($533.92 million) to buy the London Stock Exchange's (LSE) French clearing business, helping clear the way for LSE Group's proposed $28 billion merger with Deutsche Boerse.

LSE Group and LCH Group Limited confirmed that the companies have agreed on the terms of Euronext's all-cash offer.

Stephane Boujnah, chief executive at Euronext, told CNBC Tuesday that the offer was a "natural deal".

"It's a natural transaction for us, because Clearnet used to be an asset-controlled and owned by Euronext until 2003, " he said.

Boujnah explained that the deal would allow Euronext to enrich its portfolio.

"This is providing diversification of our top line, definitely, with significant post-trade incremental revenues in CDS (credit default swap) and fixed income so it's a good deal for shareholders, a good deal for clients of Euronext."

The European Commission had stated its objections to the LSE's merger with Deutsche Boerse in December, but outlined fewer concerns than in its first letter sent to both exchange operators in September. Its concerns were focused on the clearing of derivatives contracts.

Clearing has become a major issue since global reforms introduced after the 2007-09 financial crisis mean banks must clear the bulk of their derivatives trades to make them safer and more transparent.

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