LSEG

London Stock Exchange to Acquire Data Service Provider Refinitiv

LSEGEarlier this week, one of world’s major economic hub – The London Stock Exchange made an official announcement revealing that it is in talks to acquire financial data and infrastructure provider Refinitiv. According to the statement released by UK based exchange operator, the company is set to acquire Refinitiv for a total enterprise value of approximately US$27 billion. In order to ensure a smooth transaction for this business deal, London Stock Exchange group is issuing new shares worth 12 Billion GBP which will be transferred to Thomson Reuters and Blackstone Group which are current owners of Refinitiv. What this means in that, when the group is reshaped post the deal, parent firm of LSEG will hold only 30% voting rights while the current two partners who own Refinitiv will together control nearly 37% voting rights/ownership. However, this deal with Refinitiv facilitates London Stock Exchange to compete on much higher level in the global scale.

Having gained access to Refinitiv’s products such as Eikon, Tradeweb and FXAll, London Stock Exchange will emerge as a power house which can compete with major market data providers in global market such as ICE Group parent company of New York Stock Exchange, CME Group parent firm of CBOE Global Markets and Bloomberg. The outcome of this deal will greatly shape the future of UK based exchange operator and is a defining moment for LSEG’s Chief Executive Officer David Schwimmer given the scale of this deal and risk associated with it. For the deal to go through, before gaining UK watchdog’s approval, David has a monumental task of convincing shareholders of LSEG that taking on Refinitiv’s debit of $12 Billion USD is worth the risks undertaken by the organisation. Refinitiv currently serves over 40.000 customer institutions across 190 countries with clients in both buy and sell side firms, market infrastructure companies, governments, financial technology firms and corporations.  

When income from all three major platforms of Refinitiv are considered together as single entity, the firm sees an average daily trading volume well over US$ 400 Billion from forex market and US$500 Billion from fixed income assets. Speaking about the rationale behind this deal, LSEG has mentioned in its statement that the firm, “continually monitors global investment trends and the evolving regulatory landscape to anticipate future needs of customers. The digital transformation of the financial markets infrastructure landscape, together with the increased potential for innovation, is driving customer demand for sophisticated data content and analytics provided on flexible and open platforms. Against this backdrop, the Board has conviction that a leading financial markets infrastructure provider must operate globally and across asset classes, with data management, analytics and distribution capabilities that can serve customers across asset classes and geographies”. Once the deal is fully completed, the newly emerged LSEG entity would become the largest listed financial market infrastructure provider in terms of revenue. The newly merged entity will still see David Schwimmer, Chief Executive Officer, with David Warren as Chief Financial Officer while Don Roberts remains as Chairman of LSEG group. However, any and all transactions must still be approved by LSEG shareholders and antitrust and regulatory clearances, as well as other customary conditions. 

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