With another billion-dollar takeover, Deutsche Börse wants to make itself even more independent of the fluctuations on the financial markets. The stock exchange operator wants to buy the Danish software provider Simcorp for around 3.9 billion euros and thus expand the proceeds with data and the analysis of them. Simcorp’s business is “highly complementary” to the data division
The purchase is to be financed using existing cash and loans. On the stock market, the Deutsche Börse share fell sharply after the announcement due to Simcorp’s high rating – however, the paper had recently risen sharply.
The acquisition of the Danish company will enable it to take even better advantage of long-term industry trends and further diversify its business composition with growing recurring revenues. According to experts, the takeover fits well with the strategy of CEO Theodor Weimer, who has repeatedly strengthened the group with additional acquisitions in recent years. In 2021, the Frankfurt-based company bought the voting rights advisor ISS for around two billion euros.
New business dimensions
Weimer took over the management of Deutsche Börse from Carsten Kengeter at the beginning of 2018. Kengeter had to leave because of the failed takeover of the London Stock Exchange (LSE) and suspected insider trading. The former Hypovereinsbank boss Weimer not only steered the company into calmer waters, but also took the stock exchange into new business dimensions.
In the first quarter of the current year, according to the figures presented on Wednesday evening, Deutsche Börse was able to continue its recent record course. Income and profit increased significantly in the first three months compared to the same period of the previous year. The management is therefore somewhat more optimistic about the current year than last time. “In the first quarter, trading volumes developed very strongly and are above our expectations,” said Chief Financial Officer Gregor Pottmeyer.
Executive Board: Upper end of forecast could be reached
The Management Board now expects the stock market to end up at the upper end of the forecast or even slightly above it for the year as a whole. So far, an increase of up to eight percent to 4.5 billion to 4.7 billion euros was targeted for earnings. In terms of earnings before interest, taxes, depreciation and amortization (Ebitda), CEO Weimer had previously expected an increase to 2.6 billion to 2.8 billion euros, an increase of up to eleven percent.
In the first three months of 2023, net sales increased by 16 percent to 1.23 billion euros. Deutsche Börse attributed nine percentage points of growth to cyclical effects, i.e. favorable conditions for the company. Operating profit increased by twelve percent to 772 million euros.
On the stock market, the numbers faded into the background. The course of the German stock exchange paper fell on Thursday by almost six percent to 172.90 euros. However, the stock exchange operator’s shares only reached a record high at just over 186 euros at the beginning of the week.
The price of 735 Danish kroner per share offered by Deutsche Börse is 39 percent above the closing price of Simcorp shares. The top management of the Danish company will recommend that shareholders accept Deutsche Börse’s offer. A prerequisite for a successful takeover is that the German group be offered more than half of the shares.
