London Stock Exchange Group's $27bn acquisition of Refinitiv

"To create a Financial Markets Infrastructure leader of the future" – London Stock Exchange Group

Who?

Acquirer: London Stock Exchange Group

LSEG is a global financial markets infrastructure business. Its diversified global business covers Information Services, Risk and Balance Sheet Management and Capital Formation.

Through its platforms, the group offer market participants unparalleled access to European Capital Markets. The Group operates a broad range of international equity, ETF, bond and derivatives markets, including London Stock Exchange; Borsa Italiana; MTS (a European fixed income market); and Turquoise (a pan-European equities MTF).

Seller (Target): Refinitiv

Refinitiv is a global provider of financial market data and infrastructure, serving over 40,000 institutions in over 190 countries. More specifically, Refinitiv provides financial software and risk solutions – delivering news, information and analytics, enabling transactions, and connecting the global community.

Refinitiv (formerly Thomson Reuters Financial and Risk unit) was founded in 2018 and is jointly owned by Blackstone (55%) and Thomson Reuters (45%)

The Deal

Value: $27bn (expected to be an all-share transaction)

Announced: 27th July 2019 (Expected to close by end of 2020 or early 2021)

Financial Advisors to LSEG: Goldman Sachs, Morgan Stanley, Barclays, Robey Warshaw

Financial Advisors to Refinitiv: Jeffries, Evercore, Canson Capital Partners

Why?

Strategic Rationale:

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LSEG proposed acquisition of Refinitiv P.

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LSEG’s Presentation Link (on the right)

further detailing the deal

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Interestingly:

– The deal marks a quick return to public markets for Refinitiv after the company was just last year carved out of Thomson Reuters in a strategic partnership deal with Blackstone, valued at $20bn. Both Blackstone and Thomson Reuters will not be able to sell any LSE shares until at least 2022, under the terms of what both sides call a “relationship agreement”.

– Towards the end of July, LSEG announced that it may sell part or all of Borsa Italiana, Italy's only stock exchange. Reasoning: partly because the sale could help LSE get regulatory approval from the EU for the Refinitiv acquisition.

– Worried by the impact of the pandemic? David Schwimmer (LSE Chief Executive) expresses that the recurring nature of Refinitiv’s income was an “attractive element” that offers resilience during such economic conditions.

– Slight speculation: Financial Times reported that the deal transforms LSEG's business away from relying on transactions and diversifying into financial data, which will provide it with the size and scale to compete with large US operators like Bloomberg. Although, Schwimmer assured: “The transaction is not about our competing with Bloomberg. That is not the strategic rationale,”