No story better encapsulates Europe's deep exchange rivalries than that of LIFFE and its wild pinball journey through the hands of multiple exchange giants. More below:
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In the midst of disappointment at the loss of their top market, LIFFE heads Sir Brian Williamson and Hugh Freedberg embraced electronification to return to growth, with the launch of LIFFE Connect:pic.twitter.com/9vOpm19kuY
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Here's where it gets interesting. In late 2001, reports surface that LIFFE is putting itself up for sale. Multiple bidders emerge, including LSE, Deutsche Börse, and newly formed Euronext.pic.twitter.com/yJZasSNhwv
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LSE was far and away seen as the front-runner in the race for LIFFE. The exchange was struggling from over-reliance on equities & listings and needed to diversify. Their offices were right down the street, and LSE made the highest bid. LIFFE chose Euronext instead.pic.twitter.com/9ULSExXZ2U
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Why? In an interview, LIFFE CEO Hugh Freedberg said Euronext accelerated LIFFE's growth and an all-cash deal was more attractive. Bagging LIFFE was a huge win for Euronext, giving it a London presence, exposure to derivatives & solidifying it as a European contender.pic.twitter.com/2h7VoVBZSe
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In the years that followed, more European M&A added to LIFFE's ownership juggle. The NYSE bought Euronext in 2006, then ICE bought the NYSE in 2013, spun out Euronext and kept LIFFE, where it sits today. Below interview shows ICE CEO Jeff Sprecher's rationale for the deal:pic.twitter.com/p9lAybPJDc
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Takeaways: M&A comes down to WAY more than price. Politics, strategic vision and even national pride can factor into a deal that may look worse on paper. Exchanges that looked to have overpaid in the past are reaping the rewards now via strong margins and global influence.
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This week's issue of Front Month will dive into the deep history of rivalries among exchanges. Sign up here so you don't miss it:https://frontmonth.substack.com/
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