Euronext, the pan-European market infrastructure, has unveiled a share repurchase program as part of its strategic financial move driven by robust cash generation.
With a maximum allocation of €200 million, this program underscores Euronext’s commitment to a disciplined capital allocation strategy while ensuring its deleveraging path and credit rating remain unaffected.
Scheduled to kick off on July 31, 2023, and extend for up to a year, the share repurchase program will take place on Euronext Paris.
The primary objective is to reduce Euronext’s share capital by canceling all repurchased shares.
Euronext has introduced this program with the primary goal of diminishing its share capital, allowing for a maximum allocation of €200 million starting from July 31, 2023, and running for up to one year.
The initiative aims to repurchase approximately 3% of its ordinary shares, aligning with the authorization granted by the General Meeting on May 17, 2023, while adhering to a 10% limit.
This strategic move demonstrates Euronext’s commitment to disciplined capital management and aligns seamlessly with its broader financial strategy, supported by stakeholders.
Euronext has established a non-discretionary arrangement with a financial intermediary to conduct the share repurchase, ensuring transparency and adherence to regulatory guidelines.
The program will comply with applicable rules and regulations and the Commission Delegated Regulation, operating based on the authority granted by the annual general meeting of shareholders on May 17, 2023.
Importantly, this share repurchase program will not affect Euronext’s deleveraging trajectory or credit rating.
It will also maintain the Group’s financial flexibility to seize market opportunities and uphold its existing dividend policy, which involves a payout of 50% of reported net income.
Euronext commits to providing regular updates on the program’s progress in accordance with applicable regulations, ensuring transparency for stakeholders.
Previously, Euronext announced the sale of its 11.1% stake in LCH SA, a significant clearing house, to LCH Group Holdings Limited for €111 million.
This move, part of a buyback program, is set to be finalized in early July 2023. Euronext originally acquired its stake in LCH SA in 2017 through a share swap with LCH Group.
This divestment follows LCH Group’s exercise of its buyback option, leading to the early termination of the existing derivatives clearing agreement between Euronext and LCH SA.
Euronext, headquartered in the Netherlands, anticipates a tax-free capital gain of around €40 million from the sale.
As a major player in European capital markets, Euronext operates stock markets across the continent and expanded its reach through the acquisition of Borsa Italiana.
Both Euronext and LCH SA plan to collaborate on a seamless migration of clearing flows from LCH SA to Euronext Clearing.