425: Criteo Plans Luxembourg Redomiciliation, Nasdaq Direct Listing

Criteo S.A. announced its intention to transfer its legal domicile from France to Luxembourg and replace its American Depositary Shares with ordinary shares directly listed on Nasdaq, aiming for U.S. index inclusion and enhanced capital flexibility.

Summary

• Criteo intends to transfer its legal domicile from France to Luxembourg via a cross-border conversion, expected to be completed in Q3 2026.
• The company plans to replace its American Depositary Shares (ADS) structure with ordinary shares directly listed on Nasdaq.
• This move is a strategic step to position Criteo for potential inclusion in certain U.S. indices, expanding access to passive investment capital and broadening its shareholder base.
• The redomiciliation aims to provide greater capital management flexibility by reducing restrictions on share repurchases and treasury share holdings.
• It will also eliminate fees and complexities associated with ADSs, potentially increasing stock liquidity.
• Following the Luxembourg conversion, Criteo intends to pursue a subsequent transfer of its domicile to the United States as early as Q1 2027, subject to Board approval and market conditions.
• The conversion requires prior consultation with Criteo's French works council and shareholder approval by a two-thirds majority of votes cast.
• Criteo has engaged with French tax authorities and filed for a tax ruling to confirm the conversion will be tax neutral from a French tax standpoint.
• As of September 30, 2025, Criteo had 3,650 employees globally, with approximately 28% (993 employees) in French entities and 18% (664 employees) in the U.S.

Sentiment

Score: 8

Explanation: The filing outlines a clear, strategic, and well-thought-out plan to enhance shareholder value, improve capital market access, and increase operational flexibility. While there are inherent risks and conditions, the rationale is strong and addresses significant structural limitations. The company's commitment to its French operations and employees, alongside the pursuit of global competitiveness, presents a balanced and positive outlook for long-term growth and investor appeal.

Positives

• Positions Criteo for potential inclusion in certain U.S. indices, expanding access to passive investment capital and broadening its shareholder base.
• Provides greater capital management flexibility by reducing or eliminating current restrictions related to share repurchases and holdings of treasury shares.
• Eliminates fees and complexities associated with ADSs, potentially increasing stock liquidity.
• Enhances competitiveness, particularly vis-à-vis U.S. competitors, by simplifying the corporate structure.
• The conversion is structured to be tax neutral, with no anticipated material changes to the effective tax rate.
• Criteo expects its operations to remain eligible for French R&D tax credits under substantially similar conditions.
• The company has a longstanding record of returning significant capital to shareholders, having spent $115 million on share repurchases during the first nine months of 2025.

Negatives

• French corporate law imposes several restrictions that limit Criteo's financial flexibility, including share repurchase limitations and a 10% cap on treasury share holdings and share cancellations every 24 months.
• Shares traded through ADSs are generally not eligible for inclusion in major stock indices, making Criteo shares inaccessible to certain passive investors under the current structure.

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 (aggregate dissenters exit price not exceeding EUR 94.25 million or 10% of outstanding share capital).
• The transaction not being completed for any reason.
• 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 the 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.
• 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 transaction, a delay or failure in the ability to redomicile to the United States via merger into a newly incorporated and wholly-owned U.S. subsidiary for any reason.
• 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.
• 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 (such as changes in or new tariffs).
• The impact of competition.
• Uncertainty regarding legislative, regulatory, or self-regulatory developments regarding data privacy matters and the impact of efforts by other participants in the industry to comply therewith.
• Ability to obtain and utilize certain data as a result of consumer concerns regarding data collection and sharing, as well 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, 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.

Future Outlook

Criteo intends to pursue a two-step redomiciliation process, first to Luxembourg by Q3 2026, and then potentially to the United States as early as Q1 2027. This strategy aims to unlock shareholder value by improving access to capital markets, enhancing capital management flexibility, and increasing stock liquidity through direct Nasdaq listing and potential U.S. index inclusion.

Management Comments

• The Conversion demonstrates our confidence in the future and our commitment to building long-term shareholder value and global competitiveness in the technology sector, while maintaining our deep roots in the French tech ecosystem.
• Criteo remains dedicated to preserving our deep roots in the French tech ecosystem, which have been and will continue to be a fundamental part of our success.
• The Conversion will only affect Criteo's legal domicile and will have no material impact on Criteo's day-to-day operations in France and globally.
• We do not expect any changes to Criteo's corporate governance or the composition of its Board and leadership team as a result of the Conversion.
• We are confident this transaction serves the best interests of our shareholders by addressing structural barriers that limit our access to capital markets and operational flexibility.

Industry Context

The announcement reflects a significant shift in capital markets over the past decade, where passive investment strategies now represent more than half of U.S. equity assets, a substantial increase from less than 30% at Criteo's IPO in 2013. Companies traded through ADSs are generally ineligible for major U.S. stock indices, creating a barrier to accessing this growing pool of passive capital. Criteo's move is a direct response to this trend, aiming to align its corporate structure with the evolving investment landscape and enhance its competitiveness against U.S. peers.

Comparison to Industry Standards

• Criteo's current ADS structure and French domicile make it ineligible for inclusion in major U.S. stock indices, unlike many U.S.-domiciled competitors, limiting access to passive investment capital.
• French corporate law imposes restrictions on capital management, such as share repurchase limitations and caps on treasury share holdings (10%) and share cancellations (10% every 24 months), which are more restrictive than those typically faced by Luxembourg or U.S. corporations, hindering dynamic capital allocation strategies compared to global benchmarks.
• The planned direct listing on Nasdaq and potential U.S. redomiciliation aim to bring Criteo's capital market accessibility and flexibility more in line with its U.S. competitors, who benefit from broader index eligibility and fewer capital management constraints.

Stakeholder Impact

• **Shareholders:** Expected to benefit from increased access to passive investment capital, potential U.S. index inclusion, greater capital management flexibility, and improved stock liquidity. Shareholders who vote against the Conversion have dissenters' exit rights to surrender shares for cash.
• **Employees:** No anticipated impact on roles, relocations, employment agreements, or collective agreements. French operations, including R&D, will be maintained. Consultation with the French works council is required.
• **Creditors:** All existing creditor claims and contractual obligations will remain fully in force following the completion of the Conversion; creditor objections do not halt or prevent the Conversion.

Next Steps

• Initiate consultation with Criteo's French works council for a maximum period of 2 months.
• Board approval of the Conversion documents.
• Filing of a Registration Statement on Form S-4 (including a proxy statement/prospectus) with the SEC and coordinating listing with Nasdaq.
• Filing of the Conversion documentation with the clerk of the Trade and Companies Registrar in France.
• Convening an extraordinary general meeting for shareholder approval (requiring a two-thirds majority) in Q1 2026.
• Compliance and legality checks by French and Luxembourg authorities.
• Apply for a tax ruling in Japan to confirm tax neutrality for the contribution of Criteo KK stake to Criteo Technology SAS.
• Potential subsequent transfer of domicile to the United States as early as Q1 2027, subject to further approvals.

Key Dates

Recommendation

The proposed redomiciliation and direct Nasdaq listing represent a significant strategic move designed to unlock substantial shareholder value. By addressing current structural barriers to U.S. index inclusion and enhancing capital management flexibility, Criteo is positioning itself for broader access to capital, increased liquidity, and improved competitiveness. This proactive step is expected to attract a wider investor base, particularly passive funds, and optimize capital allocation, making the stock more appealing for long-term growth.

Keywords

Criteo, Redomiciliation, Luxembourg, Nasdaq, ADS, Ordinary Shares, Index Inclusion, Capital Management, Share Repurchase, Corporate Governance, French Tech, SEC Filing, Cross-border Conversion