Deutsche Börse today announced the acquisition of provider of investment management solutions SimCorp. The German stock exchange operator also released its results for the first quarter of the year.
SimCorp acquisition
Deutsche Börse has revealed plans to acquire SimCorp A/S by making a voluntary recommended public offer to purchase all shares of the company (excluding its own shares) at 735.0 DKK per share. The acquisition will be fully financed by debt, and values SimCorp A/S at EUR 3.9 billion.
The proposed acquisition price for SimCorp reflects a significant premium of 38.9% and 45.3% above the closing price of 529.0 DKK and the three-month volume-weighted average price of 505.7 DKK, respectively, as of April 26th, 2023.
SimCorp’s Board of Directors has unanimously recommended that shareholders accept the offer upon its public release. The transaction is expected to generate mid-single-digit cash earnings per share in the first year following completion, based on anticipated annual synergies.
Peter Schütze, Chair of the Board of Directors of SimCorp A/S, said:
The Board of Directors finds that the offer from Deutsche Börse AG represents attractive value for the shareholders of SimCorp A/S as the company accelerates its transformation to a full-scale SaaS and BPaaS provider to deliver sustained long-term profitable growth
Deutsche Börse AG is well-positioned to contribute to the realisation 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.
Following the completion of the acquisition, Deutsche Börse AG expects to realize annual EBITDA synergies of €90 million over a period of three years, comprising €55 million in cost synergies and €35 million in revenue synergies. It should be noted that achieving these synergies will require a one-time cost of around EUR 100 million.
Launch of new segment
Alongside this acquisition, Deutsche Börse also intends to merge its subsidiaries Qontigo and ISS, both of which specialize in data and analysis, under one leadership. Once the acquisition is completed, the newly merged Qontigo-ISS entity and SimCorp A/S will operate under a new Investment Management Solutions segment, aimed at achieving further growth, improving efficiency, and realizing full value.
Theodor Weimer, CEO of Deutsche Börse AG, said:
Over the last couple of years we have significantly enhanced our data and analytics capabilities with a strong strategic focus to further develop within the investment management business.
Weimer added:
In addition to the SimCorp A/S transaction, we have decided to merge ISS and Qontigo. Both transactions will bring long-term growth, sizeable and tangible synergies, and a significant increase of our recurring revenues. 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.
Deutsche Börse Q1 results
In addition, Deutsche Börse also published its latest updated for the first quarter of 2023. For the first three months of the year, the Group saw net revenues of €1,231 billion and a 16% jump compared to the previous year. EBITDA for the period rose 12% to €772 million.
The company said in a statement:
Strong net revenue growth is due partly to secular growth of 7 per cent and also to cyclical effects of 9 per cent.
Net profit attributable to shareholders amounted to €473 million for the period between January and March, representing a 12% rise in comparison to the previous year’s quarter. When excluding the purchase price allocation, earnings per share were €2.70, indicating a 13% increase.
These findings align with the full-year 2022 report, which showed a 24% year-over-year increase in Deutsche Börse’s net profit to €1.6 billion. Furthermore, the fourth quarter’s findings were better than the same period last year, with net revenue reaching €1.168 billion, up 25% from the prior year’s €943 million, and net profit reaching €378 million.
Deutsche Börse’s crypto startup, Crypto Finance AG, recently declared its partnership with Apex Group, a financial services provider, to offer institutional-grade digital asset products.
