The consortium of Nordic banks and brokers that own Burgundy have agreed to allow Oslo Bors to acquire the Swedish stock exchange and multilateral trading facility (MTF).
Oslo Bors has faced increasing competition in recent years as exchange operators such as BATS Chi-X and NASDAQ OMX have taken a greater share of the trading business in the Nordics.
The decline in market share due to increasing competition among securities markets has led to lower profit margins, Burgundy and Oslo Bors said in a joint statement. They say the acquisition will result in a stronger overall competitor to other Nordic exchanges and foreign trading platforms that offer trading in Nordic securities.
Oslo Bors says the acquisition will allow it to extend its offering of bond and equity listing across the Nordics. Burgundy will continue to operate under current CEO Olof Neiglick, with Oslo Bors extending its product range while collaborating with the current consortium of owners. A Burgundy customer-based advisory board will be established to ensure continuity and local expertise following the acquisition, the exchanges say.
“Oslo Brs and Burgundy will work together to continue the development of a strong and effective Nordic platform for both investors and issuers, based on efficient, low-cost operations, says Bente A. Landsnes, president and CEO of Oslo Brs. The combination of Burgundys well-known brand and the international strength of the Oslo Brs brand name will provide a strong foundation for future growth.
The deal is awaiting regulatory approvals by authorities in Norway and Sweden. The terms of the acquisition were not disclosed.
Oslo Bors, in collaboration with the London Stock Exchange (LSE), has plans to begin using LSEs Millennium Exchange trading platform in November. Burgundy will also switch to the platform, replacing its current Cinnober platform. The migration to Millennium Exchange is expected throughout 2013. Burgundy will continue to offer clearing and interoperability with its existing clearing houses: EMCF, X-Clear and EuroCCP.
Burgundy, headquartered in Stockholm, operates a regulated market as well as an MTF offering trading in more than a thousand listed companies in Sweden, Norway, Finland and Denmark. It also offers other products such as warrants, exchange-traded funds (ETFs) and certificates.
Scale and international distribution will be important ingredients in Burgundys future development, says Bertil Villard, chairman of the board of Burgundy. The board has concluded that the best solution is to make this transaction with Oslo Bors, who has strategic interest to expanding their business in the Nordics and with whom the shareholders already have an existing long-term relationship.
(CG)