London Stock Exchange seals $37b deal for GIC-backed Refinitiv to create financial data giant

The deal will turn London Stock Exchange into a major distributor as well as a creator of financial market data, positioning it as a competitor to Bloomberg.
The deal will turn London Stock Exchange into a major distributor as well as a creator of financial market data, positioning it as a competitor to Bloomberg.PHOTO: REUTERS

LONDON (REUTERS) - The London Stock Exchange (LSE) said on Thursday (Aug 1) that it has agreed to buy financial information firm Refinitiv in a US$27 billion (S$37.14 billion) deal that will transform the British company into a market data and analytics giant.

The deal, announced 10 months after a Blackstone-led consortium completed a leveraged buyout of Refinitiv from Thomson Reuters, marks a rapid turnaround for the US private equity group which is set to double the value of its investment, according to a person familiar with the deal.

As part of the deal, which was initially announced last week, Refinitiv shareholders will ultimately hold around a 37 per cent stake in LSE but less than 30 per cent of the total voting rights.

The deal came as LSE reported an 8 per cent rise in first-half total income.

The combined group will continue to be headed by LSE chairman Don Robert and chief executive David Schwimmer. Mr David Craig will join LSE's executive committee and continue as chief executive of Refinitiv.

For LSE, the deal will turn it into a major distributor as well as a creator of financial market data, positioning it as a competitor to Bloomberg.

It will also see it expand into over-the-counter (OTC) trading by taking on Refinitiv's FXall and matching platforms, complementing its existing OTC clearing businesses.

But the deal is set to be subject to lengthy antitrust reviews in both Europe and the United States, four sources told Reuters before the deal was announced.

 

In 2017, European Union competition regulators blocked LSE's attempt to merge with rival Deutsche Boerse, the exchanges' fifth attempt to combine.

The Refinitiv deal comes at a time of uncertainty over Britain's exit from the EU, and Blackstone and Thomson Reuters run the risk that the LSE share price could fall if Britain leaves the EU without a deal.

New Prime Minister Boris Johnson has vowed to take Britain out of the bloc by Oct 31 with or without a deal, the prospect of which  sent the British pound to its lowest level in more than two years this week.

Operationally, LSE has reorganised some of its EU-exposed businesses, opening an Amsterdam hub for its pan-European stock platform Turquoise, and shifted European government bond trading to the Milan arm of its MTS platform.

Blackstone's consortium, which includes Canada Pension Plan Investment Board and Singapore sovereign wealth fund GIC Special Investments Pte Ltd, holds a 55 per cent stake in Refinitiv.

Thomson Reuters, which owns 45 per cent of Refinitiv and is the parent company of Reuters, will hold 15 per cent of LSE, the Canadian company said in a separate statement.

Refinitiv will be entitled to nominate three non-executive board members for as long as they hold at least 25 per cent of LSE.

One nominee will be a representative of Thomson Reuters, and the other two nominees will be representatives of Blackstone.

LSE said it would ask shareholders to vote on the deal in the fourth quarter of 2019.