The price of shares in Danish system provider SimCorp rose by about 40 percent Thursday morning, after Deutsche Börse placed an all-cash takeover offer for the company. The SimCorp board unanimously recommends shareholders to accept the deal. The makeover will also see Deutsche Börse merge its existing businesses Qontigo and ISS, generating synergies and “aiming to form a leading high-quality ESG, data, index as well as analytics provider”.
The offer for SimCorp shares is conditioned by the possibility for Deutsche Börse to be able to buy at least 50 percent of them, in terms of voting rights and share capital. According to this SimCorp press release, top executives and directors have already committed to selling their holdings (not immediately clear if it refers to all of those managers or a part of them).
The offer of DKK 735 billion per share, in total DKK 29 billion, corresponds to EUR 3.9 billion.
Deutsche Börse says it expects the offer to be completed in the third quarter of this year.
In an “ad hoc announcement”, Deutsche Börse says it intends to combine its existing businesses Qontigo and ISS. Going by the phrasing in an analyst presentation file from Deutsche Börse on Thursday morning, that combined Qontigo and ISS business is one that the SimCorp part will be in “co-operation” with.
Could then be sold off
“The combination of SimCorp’s highly complementary business offering with Deutsche Börse’s Data & Analytics businesses will create a full scope front-to-back investment management solutions platform. This will allow Deutsche Börse to take even better advantage of secular industry trends and to further diversify its business mix with a growing share of recurring revenues,” says Deutsche Börse in its “ad hoc announcement”. Qontigo hosts index and analytics provision, with brands STOXX, DAX, and Axioma. ISS, also a data and analytics provider, with emphasis on sustainability data, was acquired with finalisation in 2021.
Further, Deutsche Börse indicates that the new business combination could become strong enough even to be spun off as a standalone enterprise, stating that its “value creating capital markets options [include] a potential IPO in the medium term”.
Through 2022, SimCorp turned over 560 million euro, with a 22-percent EBIT margin.