Facing merger of rivals, Euronext on lookout for tie-ups

By Maya Nikolaeva and Michel Rose

PARIS (Reuters) - European stock exchange operator Euronext (ENX.PA) said on Friday it was on the lookout for tie-ups of its own as rivals Deutsche Boerse (DB1Gn.DE) and London Stock Exchange Group (LSE.L) negotiate a $30 billion (21 billion pounds) merger.

The fusion of its rivals in Frankfurt and London will create a group big enough to eclipse Euronext, prompting the smaller stock exchange operator in Paris to search for alternatives to bolster its importance.

"If the world changes around us in a favourable manner ... we will be in position to capture these opportunities," chief executive Stephane Boujnah told journalists, flagging his interest in a transformational deal.

Unveiling a new strategic plan on Friday, Euronext said it would improve technology, cut costs and aim to grow sales at its core business by 2 percent a year for the next three years. At 1110 GMT, its shares were up 1.2 percent at 38.3 euros.

However, some analysts were sceptical about long-term goals in a fast-changing market. Credit Suisse analysts said revenue and cost targets for 2019 "may be taken with a pinch of salt given how far out that is".

Boujnah said Euronext could buy businesses that might be spun off after a merger of Deutsche Boerse and the London Stock Exchange (LSE) and signalled his interest in any other exchanges interested in joining a bigger group.

Antitrust regulators at the European Commission in Brussels could yet demand such sales in return for allowing the merger to go through.

Were the derivatives clearing arm of the LSE, LCH Clearnet, to be spun off, that would offer Euronext a possible foothold in the lucrative multi-trillion dollar global derivatives market.

Sources have previously told Reuters that Euronext was eyeing LCH.Clearnet, which was formed in 2003 when the London Clearing House merged with Paris-based Clearnet.

Euronext, which runs stock exchanges in Paris, Amsterdam, Brussels and Lisbon, could also be interested in making a play for LSE-owned Borsa Italiana in Milan to add to its suite of stock trading houses, one source has said.

Share trading, however, is very competitive while derivatives trading offers better growth prospects.

With a market value of about 2.6 billion euros ($3 billion), Euronext will be a comparative minnow if the LSE-Deutsche Boerse deal goes ahead.

"This can evolve in many directions, large scale transactions take longer than expected and never end as initially planned," Boujnah said, adding the European Commission's antitrust view on the deal was not yet known.

Earlier this week, Euronext posted better-than-expected profit in the first three months of the year as cost cutting helped to make up for a drop in trading and falling stock-market listings.

(Reporting by Michel Rose and Maya Nikolaeva; additional reporting by Huw Jones in London; Editing by John O'Donnell and Mark Potter)