DIFC May Be Planning Surprise Swoop On Euronext

by Lorys Charalambous, Tax-News.com, Cyprus

25 April 2006

The Dubai International Financial Centre (DIFC) is said to be considering a bid for Euronext, the European exchange group.

According to a report in London's Sunday Times, the DIFC, which owns the Dubai Stock Exchange, is understood to be "planning a last-minute swoop" on Euronext as part of a bold plan to expand its investments in foreign financial institutions.

The news emerged following the revelation by the DIFC last week that it has upped its stake in Euronext to 1.3%.

“DIFC Authority investment arm confirms it has acquired more than a 1% stake in Euronext," DIFC spokesperson Charles Skeeles announced last week.

"Investing in Euronext is consistent with our focus and long term strategic aim of developing the Dubai International Financial Centre to complement those centres in Europe, USA and the Asia Pacific region," he explained.

Mr Skeeles also stated that the DIFC's investment in Euronext has been made with the "full knowledge and agreement" of the Board and management of Euronext.

The Times report adds a new twist to ongoing talks between the world's major exchanges, which are continuing to explore a variety of merger and acquisition options; Deutsche Boerse and Euronext, which runs the Paris, Brussels, Amsterdam and Lisbon bourses and the London derivatives exchange, Liffe, are currently engaged in exploratory merger talks. Both companies have also expressed an interest in acquiring the London Stock Stock Exchange, although the former's bid was abandoned last year after opposition from major shareholders led by the hedge funds Atticus Capital and The Children's Investment Trust.

Between them, Euronext and Deutsche Boerse control virtually all of the exchange-traded derivatives markets in Europe, and about half of the global total.

Euronext chief executive Jean-Francois Theodore is expected to announce Euronext’s preferred option before the exchange’s annual meeting on May 23.

Meanwhile, the LSE is also being eyed by the New York Stock Exchange and Nasdaq, the US technology-based exchange.

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