Oslo Børs: Euronext still in a position of strength

Nasdaq AB (indirect subsidiary of Nasdaq Inc.) announced this morning it will make a public offer to acquire all of the issued shares of Oslo Bors VPS (OBV). The price proposed is SEK152, which is a 5% premium on Euronext’s proposed offer (but roughly only 3% higher when taking into account the interest paid by Euronext on the offer price, from the date of acceptance until fulfilment of the conditions of the offer).

Nasdaq AB received irrevocable pre-acceptances of the offer from shareholders representing 35.11% of the total shares (among which DnB and KLP which represent 30% of total shareholders).

This offer has the support of the board which unanimously recommends that the shareholders of Oslo Bors VPS accept the offer and NOT the Euronext offer.

It is important to say that, in any case, Euronext had received irrevocable pre-acceptances from shareholders representing, together with shares already owned, 50.5% of the Norwegian company (one share is equal to one vote according to the company’s statute).

The Nasdaq Group (via its subsidiary Nasdaq AB) announced it will make a public offer on OBV with a proposed price of SEK152 (5% on Euronext’s proposed price).
The board of OBV is unanimously supporting this offer for several reasons, among which the proximity with Sweden or Finland, whose stock exchanges are already owned by the Nasdaq Group.

Euronext has made no public comment at this time and it is hard to guess Euronext’s next move.

It may drop the offer or increase its bid (to get the last 14.39%) on the company. It could also simply go on with a minimum 50.5% of the company, being therefore exposed to rather powerful minorities, which appear to be important users of OBV (such as DnB).

The offer from Nasdaq bears some conditions, such as obtaining regulatory clearances, a limited confirmatory due diligence and, above all, acceptances of the offer from shareholders holding 90% or more of the shares of OBV. The expiry of the offer period (starting around 4 February 2019) is expected on around 4 March 2019.

Even if it can be extended, it is worth reminding that Euronext received irrevocable binding pre-commitments of about 45.2% (valid until the stop date, 31 August 2019).

Our guess is that OBV’s board is counting on the Norwegian authorities to have Euronext’s offer derailed (from OBV’s press release: ”a situation in which 1/3 or more of the shareholders refuse to accept the Euronext Offer is likely to result in a sub-optimal ownership and governance structure”).

Given the current facts, Euronext is in a position of strength to go on with the deal and could increase its bid above the ridiculous increase proposed by the Nasdaq Group.

We had calculated a 10% increase in EPS in year 1 without any synergies. This leaves room for Euronext to increase the proposed price to go for the non-aligned shareholders.

Full research report on Euronext available : www.alphavalue.com