The agreed new requirements provide Euronext N.V. with the necessary flexibility to pursue its strategic objectives and remove uncertainty around its financial structure, while not hampering financial stability in the long-term. The improved requirements enable Euronext to pursue acquisitions and investments and to define a prudent and consistent dividend policy and financial structure.
The new prudential requirements are articulated into two key pillars:
- A long-term positive tangible equity requirement mitigated by:
- The possibility to deduct the potential goodwill arising from acquisitions in annual arrears of 10 years or more (“grow-in-period”) taking into account i) the dividend policy of Euronext N.V. and ii) the actual acquisition multiples paid, should the P/E ratio paid for the acquisition exceed 10 times;
- The possibility to go and remain temporarily into negative tangible equity territory without direct implication on the dividend policy of the Group.
- Euronext N.V. will, in accordance with applicable requirements, be able to define its own dividend policy as determined by the Supervisory Board and approved in its Annual General Meeting, taking into consideration that a situation of negative tangible equity will not limit the distribution policy, provided that it does not endanger the long-term financial stability of the Company. Euronext considers that it does not endanger its long-term financial stability as long as its gross debt to EBITDA ratio does not exceed 3.5x.
As a result of the agreement, the Dutch Ministry of Finance has decided to withdraw its appeal against the ruling of the District Court of Rotterdam of 17 December 20152. The new prudential requirements will be integrated in a new license in a way that adequately ensures a stable capital structure3, complying with the Dutch Financial Supervision Act (‘Wft’).
At the Eurofi conference in Amsterdam on 21st April 2016, Jeroen Dijsselbloem, Minister of Finance of the Netherlands, said, “Euronext is a shining example of the pan European capital market. It’s crucial for financing companies and this is what the Capital Market Union is about.”
Stéphane Boujnah, Euronext CEO and chairman of the Managing Board, said, “We are very pleased to reach this agreement and I would like to thank the Dutch Ministry of Finance and the AFM for their constructive and cooperative approach to forming the new prudential requirements. The outcome of our agreement means that Euronext is free to make acquisitions and investments, which deliver growth and further strengthen our competitive position. We can now unambiguously continue playing our key role in financing the real economy.”
