LSE seeks to acquire GIC-backed Refinitiv in deal valued at US$27b

London Stock Exchange Group is in talks to acquire Refinitiv, the financial data and trading platform provider, adding fuel to the bourse's fastest-growing business.
London Stock Exchange Group is in talks to acquire Refinitiv, the financial data and trading platform provider, adding fuel to the bourse's fastest-growing business.PHOTO: REUTERS

LONDON (BLOOMBERG) - The London Stock Exchange (LSE) Group is in talks to acquire Refinitiv, the financial data and trading platform provider, in a deal that could be valued at US$27 billion (S$37 billion) and would add fuel to the bourse's fastest-growing business.

The exchange would issue shares as part of the transaction and Refinitiv holders may receive a stake of approximately 37 per cent, LSE said early on Saturday (July 28) in London in a statement.

The effort is the first major strategic move by LSE chief executive officer David Schwimmer, who joined the exchange from Goldman Sachs last August and has been riding a 40 per cent surge in the stock price this year. The company has seen the most growth in the last few years from its information services unit, driven by the FTSE Russell Indexes business, adding a data goliath would aim to help accelerate that push.

It would also be a quick flip for the Blackstone Group-led consortium that bought a majority stake in Refinitiv from Thomson Reuters Corp last year. The company has been active ever since, as its Tradeweb Markets LLC bond-trading platform went public in April, and Deutsche Boerse's chief executive officer said this week that his firm is still in talks to buy some of Refinitiv's foreign-exchange business units.

News of the talks had filtered out on Friday. A deal could be announced as soon as next week, according to people familiar with the situation, who asked not to be identified because the discussions are private. No final agreement has been reached and the talks could still fall apart, the people said.

A formal agreement for the deal could be announced on Aug 1, when LSE publishes half-year earnings, according to two of the people.

A representative for Blackstone declined to comment earlier.

Thomson Reuters said in a statement that it expects to hold about a 15 per cent stake in LSE if the transaction is completed. The 30-year Reuters News agreement signed with Refinitiv in 2018 will continue if ownership of Refinitiv changes, according to the statement.

Blackstone, Canada Pension Plan Investment Board and GIC, Singapore's sovereign wealth fund, acquired 55 per cent of Refinitiv - as the former financial and risk unit of Thomson Reuters was renamed - in a transaction last year that valued the business at US$20 billion.

Thomson Reuters, which still has a 45 per cent stake in Refinitiv, rose 4.3 per cent after the Financial Times reported talks between LSE and Refinitiv earlier on Friday.

LSE has previously sought to bulk up by merging with Deutsche Boerse, a deal that would have vaulted the combined firm into the ranks of the biggest global exchange firms, along with CME Group and Intercontinental Exchange Inc. But that combination was blocked by regulatory hurdles and Mr Schwimmer ruled out big exchange mergers after taking the job.

"The LSE is clearly pursuing deals that are more vertical than horizontal, presumably after seeing competition difficulties issues arise when some deals with other exchanges are mooted," said Ms Niki Beattie, founder of consultancy Market Structure Partners in London.

In recent months, LSE has benefited from a programme to link up with Chinese markets and a move by European regulators in February to allow euro clearing on both sides of the English Channel under any Brexit scenario.

Refinitiv offers products such as the Eikon terminals, the FXall platform and trading execution system Redi. Bloomberg, the parent of Bloomberg News, competes with Refinitiv to provide financial news, data and information.