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IT savings central to London Stock Exchange takeover plan

Nick Huber

Euronext has outlined details of its proposed put bid for the London Stock Exchange, placing promised IT cost savings at the heart of its offer.

In a document published today the Pan-European stock exchange said acquiring the London Stock Exchange would create annual pre-tax savings of €203m (£109m).

IT will account for more than half of these savings, at £65m. Euronext declined to put a value on its bid.

Most IT savings (£45m) would come from migrating cash trading to a single electronic trading system, Euronext said, adding that this would only be done after consultation with users.

It said that it had not decided whether it would use its trading system, NSC, or the London Exchange’s Sets, if its bid is successful.

Other IT savings (£22m) would come from combining all UK IT services in one datacentre and network, the Euronext document added.

Euronext, comprising the Amsterdam, Brussels, Paris and Lisbon exchanges and the London derivatives exchange Liffe, said that IT was a "critical component" in its bid for the London exchange.

Euronext’s bid proposal intensifies the bidding war for the London exchange, which has already rejected a £1.3bn bid from German exchange Deutsche Borse.

Experts have said that the Deutsche Borse stock exchange will need to win approval from investment banks and regulators for possible changes to trading technology at the London Stock Exchange if its planned takeover is to be successful.

If the takeover goes through, it is believed the Frankfurt exchange would consider replacing the London Exchange's Sets trading platform with its own Xetra platform to cut costs.

The issue highlights the central role of IT in discussions over mergers and acquisitions.

Related Topics: IT strategy, VIEW ALL TOPICS

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