LSEGG agrees $27bn deal for PE-backed Refinitiv

October 2019 | DEALFRONT | MERGERS & ACQUISITIONS

Financier Worldwide Magazine

October 2019 Issue

Private equity (PE) backed financial information provider Refinitiv is to be acquired by London Stock Exchange Group (LSEGG) in a deal worth $27bn, subject to regulatory and shareholder approval. The deal is expected to close in the second half of 2020.

Under the terms of the deal, Refinitiv shareholders will hold around a 37 percent stake in LSEG, but less than 30 percent of total voting rights. LSEG will issue around $14.5bn of new shares to fund the deal and take on Refinitiv’s net debt of $12.5bn.

A consortium led by Blackstone, which includes Canada Pension Plan Investment Board and Singaporean sovereign wealth fund GIC Special Investments Pte Ltd, holds a 55 percent stake in Refinitiv. Blackstone acquired its stake from Thomson Reuters in October 2018 in a $17bn deal. The firm took control of Thomson Reuters’ financial and risk product portfolio, with the exception of regulatory intelligence, risk compliance learning and data privacy advisory services, and named the company Refinitiv. Thomson Reuters will hold a 15 percent share in LSEG.

Financially, both LSEG and Refinitiv believe that the merger would be advantageous. The companies have targeted the delivery of revenue compound annual growth rate of 5 to 7 percent over the first three years following completion of the deal, as well as annual run-rate cost synergies in excess of £350m by the end of year five following completion, and significant additional benefits from refinancing Refinitiv’s existing debt.

“LSEGG’s business is highly complementary with Refinitiv’s leading global data platform, transaction and distribution network,” said David Craig, chief executive of Refinitiv. “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. Our two companies both have strong heritages, a shared approach to open access and partnership, and we are excited to work with the LSEGG team to create a leading financial markets infrastructure group and to continue to invest in our business.”

“This transaction is a defining moment for LSEGG in terms of its strategic importance,” said Don Robert, chairman of LSEGG. “It will create substantial value for our shareholders and important benefits for our customers, employees and other stakeholders. The board and I look forward to welcoming Blackstone and Thomson Reuters as supportive, long-term shareholders as we work together to realise the compelling benefits of this transaction.”

“With the acquisition of Refinitiv, we will transform our position as a leading global Financial Markets Infrastructure group,” said David Schwimmer, chief executive of LSEGG. “Refinitiv brings highly complementary capabilities in data and capital markets, as well as deep customer relationships across a truly global business. We share a commitment to open access and to partnering with our customers to deliver innovative solutions across the financial markets value chain. Our shareholders and customers will benefit from attractive top line growth prospects, substantial cost and revenue synergies, as well as ongoing efficiency initiatives, and this transaction will ensure we are well positioned for future growth in an evolving landscape.”

“Refinitiv has been an outstanding performer for Blackstone and our partners Thomson Reuters, CPPIB, and GIC,” said Martin Brand, senior managing director at Blackstone. “We believe the combination announced today creates a strongly positioned leader in financial markets infrastructure, and we are excited about the continued prospects of Blackstone’s investment as a long-term partner of LSEGG.”

LSEGG employs about 5000 people globally, while Refinitiv has 19,000 employees. In March, LSEGG said it was cutting about 250 staff, 5 percent of its global workforce, to save £30m.

The deal may be subject to long antitrust investigation in Europe and the US, however, as regulatory bodies consider whether the deal will have a major impact on competition.

Richard Summerfield