Deutsche
Börse Group, the operator of the German stock exchange, published two important
updates on Thursday concerning the results for the first quarter of 2023 and
the acquisition of SimCorp, a provider of investment management solutions.In response
to the latest reports, the company’s shares on the German stock exchange (XETR: DB) are losing nearly 7% and falling to EUR 170, the lowest monthly level.
On the other hand, SimCorp (CPH: SIM) is in the process of increasing by 38%.Deutsche Börse Announces
Acquisition and Launch of New SegmentDeutsche
Börse AG announced a voluntary recommended public offer to acquire all shares
(except for its own shares) of SimCorp A/S at 735.0 DKK per share in a
transaction fully financed by debt. Thus, SimCorp A/S is valued at EUR 3.9 billion.Parallel to
the acquisition of SimCorp A/S, Deutsche Börse AG plans to merge its existing
subsidiaries Qontigo and ISS, which deal with data and analysis, under one
leadership. Upon completion of the offer, the merger of Qontigo and ISS and
SimCorp A/S will be grouped within the newly created Investment Management
Solutions segment to drive further growth, efficiency, and full crystallization
of value.”Both
transactions will bring long-term growth, sizeable and tangible synergies, and
a significant increase of our recurring revenues,” Theodor Weimer, the CEO
of Deutsche Börse AG, said. “We would be delighted to welcome SimCorp A/S,
which has been a trusted business partner for many years, to Deutsche Börse
Group and to embark on this exciting journey together.”After the
offer is finalized, Deutsche Börse AG anticipates achieving annual EBITDA
synergies of EUR 90 million within a span of three years. This includes EUR 55
million in cost synergies and EUR 35 million in revenue synergies. However,
it’s important to note that there will be a one-time cost of approximately EUR
100 million to attain these synergies.Deutsche
Börse’s shares are falling to EUR 170, losing about 7% on Thursday. Meanwhile,
shares of SimCorp listed on the Danish stock exchange are gaining nearly 40%
and rising to DKK 732, which is the highest since January 2022.Details of the Deutsche
Börse TransactionThe offer
price for SimCorp represents a premium of 38.9% and a premium of 45.3% compared to
the closing price of 529.0 DKK and a 3-month volume-weighted average price of
505.7 DKK, respectively, as of 26 April 2023.The Board
of Directors at SimCorp A/S has unanimously decided to recommend shareholders
of SimCorp A/S to accept the offer once it is made public. Based on anticipated
annual synergies, the transaction is projected to yield mid-single-digit cash
earnings per share in the first year following its completion.”The
Board of Directors finds that the offer from Deutsche Börse AG represents attractive
value for the shareholders of SimCorp A/S,” Peter Schütze, the Chair of the
Board of Directors of SimCorp A/S, said. “Deutsche
Börse AG is well-positioned to contribute to the realization of the long-term
potential of SimCorp A/S, and the offer is a clear testament to the strong
position and prospects of SimCorp A/S in a global investment industry
undergoing fundamental changes and seeing rising demand for integrated
technology platforms.”Deutsche Börse Group
Starts 2023 with GrowthIn addition
to information about the acquisition of SimCorp, the Group published its
latest quarterly report for the last three months of 2023. It reveals that net
revenues in this period increased 16% to EUR 1.231 billion and EBITDA 12%
to EUR 772 million.”Strong
net revenue growth is due partly to secular growth of 7% and also to cyclical
effects of 9%,” Deutsche Börse commented in a statement.The net profit
attributable to shareholders was EUR 473 million, translating to an increase of 12% compared to last year’s quarter. Before considering purchase price allocation, earnings per share amounted to EUR 2.70, which signifies a 13% increase.The results
are consistent with the report for the full year of 2022, in which Deutsche
Börse’s net profit increased 24% to EUR 1.6 billion. Additionally, the
results for the fourth quarter were better than the same period a year ago. Net
revenue rose to EUR 1.168 billion, which is a 25% increase compared to the previous
year’s €943 million, and net profit was €378 million.In one of
the latest updates, Deutsche Börse’s crypto startup Crypto Finance AG
announced its partnership with Apex Group, a financial services provider. The
alliance aims to offer institutional-grade digital assets products.
This article was written by Damian Chmiel at www.financemagnates.com.
