425: Criteo Plans Luxembourg Redomicile, Nasdaq Direct Listing

Criteo S.A. announced its intention to redomicile to Luxembourg and list its ordinary shares directly on Nasdaq, aiming to unlock shareholder value and enhance capital flexibility.

Summary

• Criteo intends to redomicile to Luxembourg and replace its current American Depositary Share (ADS) structure with a direct listing of its ordinary shares on Nasdaq.
• This strategic step is expected to unlock significant and sustainable shareholder value by optimizing the corporate structure.
• Key advantages include eliminating most legal complexities, enhancing capital allocation flexibility, and broadening the shareholder base.
• The change is designed to enhance capital management flexibility, specifically by eliminating restrictions on share repurchases.
• It aims to position Criteo for potential inclusion in major US stock indices, expanding access to passive capital and triggering associated benchmarking from actively managed funds.
• The process is expected to be completed in the third quarter of 2026, subject to prior consultation of Criteo's works council and shareholder approval.
• A subsequent redomiciliation to the United States is intended, potentially as early as the first quarter of 2027, to further broaden access to US capital markets.
• Management does not foresee any material costs related to this redomiciliation, and any costs incurred will be isolated within their financial findings.

Sentiment

Score: 8

Explanation: The filing outlines a strategic move aimed at significantly enhancing shareholder value, capital flexibility, and market access, with management expressing confidence in the benefits and minimal costs. The primary risks are procedural and market-related rather than operational.

Positives

• Expected to unlock significant and sustainable shareholder value.
• Eliminates most legal complexities currently applicable to Criteo.
• Enhances flexibility in capital allocation.
• Broadens the shareholder base.
• Eliminates restrictions related to share repurchases, enhancing capital management flexibility.
• Positions the company for potential inclusion in major US stock indices.
• Expected to expand access to passive capital and trigger associated benchmarking from actively managed funds.
• No material costs are anticipated for the redomiciliation.

Risks

• Failure to obtain the required shareholder vote to adopt the proposals needed to complete the transaction.
• Failure to satisfy any of the other conditions to the transaction, including the condition that the option to withdraw shares for cash is not exercised above a certain threshold.
• The transaction not being completed.
• The impact or outcome of any legal proceedings or regulatory actions that may be instituted against Criteo in connection with the transaction.
• Failure to list shares on Nasdaq following the transaction or maintain listing thereafter.
• Inability to take advantage of the potential strategic opportunities provided by, and realize the potential benefits of, the transaction.
• The disruption of current plans and operations by the transaction.
• The disruption to relationships, including with employees, landowners, suppliers, lenders, partners, governments, and shareholders.
• Uncertainty regarding the future financial performance of Criteo following the transaction, including anticipated growth rate and market opportunity.
• Changes in shareholders' rights as a result of the transaction.
• Inability to terminate the deposit agreement and withdraw ordinary shares from the depositary to terminate the ADS program.
• Difficulty in adapting to operating under the laws of Luxembourg.
• The deferment or abandonment of the transaction by the board of directors up to three days prior to the general shareholders meeting.
• Following the completion of the Luxembourg redomiciliation, a delay or failure in the ability to redomicile to the United States.
• Potential costs or taxes related to the transaction.
• Changes in general political, economic, and competitive conditions and specific market conditions.
• Adverse changes in the marketing industry.
• Changes in applicable laws or accounting practices.
• Failure related to technology and the ability to innovate and respond to changes in technology.
• Uncertainty regarding the ability to access a consistent supply of internet display advertising inventory and expand access to such inventory.
• Risks associated with investments in new business opportunities and the timing of these investments.
• Whether the projected benefits of the transaction, acquisitions, or other strategic transactions materialize as expected.
• Uncertainty regarding international operations and expansion, including related to changes in a specific country's or region's political or economic conditions or policies.
• The impact of competition.
• Uncertainty regarding legislative, regulatory, or self-regulatory developments concerning data privacy matters and the impact of efforts by other industry participants to comply therewith.
• Ability to obtain and utilize certain data as a result of consumer concerns regarding data collection and sharing, as well0 as potential limitations in accessing data from third parties.
• Failure to enhance the brand cost-effectively.
• Recent growth rates not being indicative of future growth.
• Ability to manage growth and potential fluctuations in operating results.
• Ability to grow the base of clients.
• Risks related to future opportunities and plans, including the uncertainty of expected future financial performance and results.
• Other risks detailed from time-to-time under the caption Risk Factors in Criteo's SEC filings and reports.

Future Outlook

Criteo anticipates that the redomiciliation to Luxembourg and subsequent direct listing on Nasdaq will unlock significant and sustainable shareholder value, enhance capital allocation flexibility, broaden its shareholder base, and position it for inclusion in major US stock indices. A further redomiciliation to the United States is planned for early 2027 to deepen access to US capital markets.

Management Comments

• Michael Komasinski: "We view this as an important strategic step toward unlocking significant and sustainable shareholder value, which reflects our commitment to ensuring Criteo has the optimal corporate structure."
• Sarah Glickman: "This change is designed to enhance our capital management flexibility, eliminating restrictions that Criteo currently faces in relation to share repurchases and position us for potential inclusion in major US stock indices."
• Sarah Glickman: "We believe it would expand our access to passive capital, triggering associated benchmarking from actively managed funds and broadening our shareholder base."
• Sarah Glickman: "We don't see any material costs related to that. And we will isolate those within our findings so you can see what those costs are."

Industry Context

The move to redomicile and directly list on Nasdaq reflects a broader trend among international companies seeking to optimize corporate structures for better access to the deep and liquid U.S. capital markets. This strategy is often employed to enhance shareholder value, improve capital management flexibility, and gain visibility among a wider investor base, including passive funds and institutional investors benchmarked against major U.S. indices.

Comparison to Industry Standards

• Many international companies, particularly those with significant U.S. operations or investor bases, have pursued similar redomiciliation or direct listing strategies to streamline corporate governance and enhance market access.
• For example, companies like Flutter Entertainment have explored U.S. listings to tap into larger investor pools.
• While specific financial benchmarks are not provided in this filing, the strategic rationale aligns with best practices for optimizing capital structure and market presence for global firms.

Corporate Governance

Stakeholder Impact

• Shareholders: Expected to unlock significant and sustainable shareholder value, broaden shareholder base, enhance capital allocation flexibility, potential for US stock index inclusion, but also face potential changes in shareholder rights and risks of legal proceedings.
• Employees: Potential disruption to relationships due to the transaction.
• Lenders, Partners, Suppliers, Governments: Potential disruption to relationships due to the transaction.

Next Steps

• Prior consultation of Criteo's works council.
• Shareholder approval for the redomiciliation to Luxembourg.
• Filing of a Registration Statement on Form S-4 with the SEC, including a preliminary proxy statement/prospectus.
• Completion of redomiciliation to Luxembourg and direct listing on Nasdaq by Q3 2026.
• Pursuit of a subsequent redomiciliation to the United States, potentially as early as Q1 2027.
• Isolation of any material costs related to the redomiciliation within financial findings.

Key Dates

Recommendation

The proposed redomiciliation and direct Nasdaq listing are strategic moves designed to significantly enhance shareholder value, improve capital management flexibility, and broaden access to a larger, more liquid U.S. capital market. The elimination of legal complexities, potential for inclusion in major U.S. indices, and removal of share repurchase restrictions are strong positives. Management anticipates no material costs, and while risks exist, they are primarily procedural and market-related, common to such large-scale corporate actions. This proactive step positions Criteo for long-term growth and increased investor appeal.

Keywords

Criteo, Redomiciliation, Luxembourg, Nasdaq, Direct Listing, Shareholder Value, Capital Allocation, Corporate Governance, SEC Filing, ADS, Stock Index Inclusion, Capital Markets