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Deutsche Boerse pledges ‘targeted M&A’ with $218 million share buyback following LSE merger collapse
Deutsche Boerse (XETRA: DB1-DE)'s 200 million euro ($218 million) share buyback will be used to fund "organic growth and targeted M&A (mergers and acquisitions)", the company's CFO Gregor Pottmeyer said Thursday.
The program is due to be implemented in the second half of the year and will be funded with proceeds from the $1.1 billion sale of the International Securities Exchange (ISE) to Nasdaq in 2016.
"We won't change our capital management policy, so our primary use for our funds is for organic growth and for targeted M&A.
"This M&A has to be clearly accretive and we want to do M&A where the execution risk is manageable," Pottmeyer told CNBC on Thursday.
The announcement should buoy investors following the collapse of a proposed merger between the German stock exchange and the London Stock Exchange (London Stock Exchange: LSE-GB) (LSE), which was vetoed by EU regulators at the end of March .
The deal would have created Europe's biggest stock exchange, however, the European Commission ruled that it would have led to a monopoly in the processing of bonds.
On Wednesday, Deutsche Boerse reported quarterly revenues which beat analyst expectations. Adjusted net profit rose 5 percent to 232.2 million euros from 221.3 million euros a year earlier.
The company's CEO Carsten Kengeter is currently under investigation by German police and prosecutors over allegations of possible insider trading.
Pottmeyer said that he could not comment on the investigation but said that "the supervisory board fully backs our CEO."
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