European giants try radical path to stock market glory

THE LATEST MOVES by European companies to list in the US are more radical than meets the eye.AstraZeneca and TotalEnergies want to upgrade their existing US equity offering to stock from from quasi stock—a well-trodden path. But as ever, the devil is in the detail.

- CHRIS HUGHES

Ineach case, the idea is to convert the firm’s American depositary receipts (ADRs) to ordinary shares. ADRs are a tradable legal wrapper for non-US stock; the underlying share is warehoused by a financial institution such as Bank of New York Mellon. The beauty of ADRs is that they simplify dealing in overseas companies for US investors, and give those corporations easy access to US demand. Switching to ordinary shares means grappling with the difficulties that ADRs circumvent.

First, consider AstraZeneca. In taking a full US listing, the settlement of its share trades moves to the US Depository Trust. Since it’s retaining the UKasa trading venue, the way its stock changes hands in London will have to now accommodate technical and regulatory constraints. This means wrapping the London shares ina legal structure called a depositary interest—which is free of UK stamp tax.