London Stock Exchange Group today announced the signing of a definitive agreement to acquire financial information firm Refinitiv, in a $27 billion deal that will transform the British group into a market data and analytics giant.
The deal, announced ten months after a Blackstone-led consortium completed a leveraged buyout of Refinitiv from Thomson Reuters, marks a windfall for the US private equity group, which is set to double the value of its investment, according to sources familiar with the deal.
Thomson Reuters, the parent company of Reuters, holds a 45 per cent stake in Refinitiv.
The transaction will create a leading, UK-headquartered, global financial market infrastructure (FMI) provider with a leading data and analytics business, significant capital market capabilities across multiple asset classes and a broad post-trade offering, well positioned for future growth, Refinitiv stated in a release.
The transaction will result in Refinitiv’s shareholders – a consortium of investment funds affiliated with Blackstone as well as Thomson Reuters – ultimately holding an approximate 37 per cent economic interest in LSEG and less than 30 per cent of the total voting rights of LSEG. Subject to among other considerations, certain regulators not having objections to proposed nominees, Refinitiv shareholders will be entitled to nominate up to three non-executive directors to the LSEG board, two of whom will be representatives of Blackstone and one a representative of Thomson Reuters.
Refinitiv’s shareholders will have an important investment in the combined business and have agreed to be subject to a lock-up for the first two years following completion of the transaction, expected in the second half of 2020. In each of years three and four following completion, Refinitiv’s shareholders will become entitled to sell one-third of the shares issued to them and the lock-up will terminate on the fourth anniversary of completion.
Refinitiv’s chief executive officer David Craig will continue in his role and join LSEG’s executive committee. The combined business will be chaired by LSEG’s chairman Don Robert and led by David Schwimmer, LSEG’s chief executive officer with David Warren as LSEG’s chief financial officer.
“LSEG’s business is highly complementary with Refinitiv’s leading global data platform, transaction and distribution network. Our aim is to capture the opportunity of data which we believe is driving unprecedented change in the global financial community. The combined business will allow us to better serve customers across all regions,” David Craig, CEO of Refinitiv, said.
“Our two companies both have strong heritages, a shared approach to open access and partnership, and we are excited to work with the LSEG team to create a leading financial markets infrastructure group and to continue to invest in our business,” he added.
The announcement came as LSE reported an 8 per cent rise in first-half total income.
Refinitiv is one of the world’s largest providers of financial markets data and infrastructure, serving over 40,000 institutions in over 190 countries.
The company offers a suit of leading data, analytics, trading, and risk assessment tools to drive performance in trading, investment, wealth management, regulatory compliance, market data management, enterprise risk and fighting financial crime. These tools include World-Check, a risk intelligence database for financial crime legislation compliance, FXall, Eikon, the execution management system REDI, Datastream for macro-economic analysis, AutoAudit and our Elektron Data Platform, a suite of propositions that power the enterprise and connect global markets.
LSEG's diversified global business is focused on information services through its financial indexing, benchmarking and analytical services, FTSE Russell; Post-trade services through its leading global multi-asset CCPs, LCH and CC&G, and custody and settlement business; and capital markets through its broad range of international equity, fixed income and derivatives markets.
The combined business will be well positioned in all key geographies and will offer significant customer benefits across the full range of LSEG's businesses by extending its trading capabilities across asset classes; expanding its data content, management and distribution capabilities; increasing its global footprint and range of customer offerings; and enabling LSEG, Refinitiv and their customers to benefit from future data and technology-enabled innovation and growth opportunities.
Together, LSEG and Refinitiv generated combined annual revenue of over £6 billion in 2018, which would have made the combined business the largest listed global FMI provider by revenue last year.