An advertisement for Refinitiv is seen on a screen in London's Canary Wharf on Oct. 2, 2018.RUSSELL BOYCE/Reuters
London Stock Exchange shares rose more than 15 per cent to a record high on Monday after it said it was in talks to buy financial data firm Refinitiv, in a deal worth $27 billion including debt.
The proposed deal, which would turn LSE into a global player in financial data and expand its footprint in foreign exchange and fixed income, comes less than a year after Blackstone bought a majority stake in Refinitiv from Thomson Reuters, which valued it at $20 billion.
LSE’s shares were 15 per cent higher at 6,520 pence at 1110 GMT on Monday after hitting a record high of 6,562 pence, taking them to the top of London’s blue chip index.
Thomson Reuters, the parent company of Reuters, holds a 45 per cent stake in Refinitiv. A person familiar with the matter told Reuters that if the negotiations conclude successfully, a deal could be announced this week.
LSE shareholder Royal London Asset Management (RLAM) said it was right the exchange expanded further into data, but that it wanted more information about Refinitiv’s business lines.
“We are eager to hear more from management as to their quality and ability to integrate them,” Mike Fox, head of sustainable investments at RLAM, holds 0.98 per cent of LSE, said in an e-mail.
Refinitiv’s bonds, issued when Blackstone bought Thomson Reuters’ Financial and Risk business to form Refinitiv, rallied across the curve on Monday.
For example, a senior unsecured US dollar November 2026 bond rose 5 cents on the dollar to 109.5, sending the yield – which moves inversely to price – to 5.4791 per cent from 7 per cent at the end of last week.
Refinitiv had $12.2 billion in debt as of the end of December as a result of its leveraged buyout by Blackstone, which LSE would assume under the proposed deal.
A merger with Refinitiv would significantly expand LSE’s information services business, which the bourse operator has been building as a more stable source of cash flow than its primary transaction-reliant businesses.
JP Morgan analysts said the deal would be strategically sensible, and in line with the LSE’s strategy to focus on deals that extend into growth areas such as data and analytics and to complement existing businesses.
LSE tried to merge with rival Deutsche Boerse AG in 2017, their fifth attempt to combine, but the deal collapsed when European regulators blocked it due to concerns about overlaps in their bond processing businesses.
Deutsche Boerse had been in talks to buy Refinitiv’s FX trading platform FXAll but said on Saturday that the deal was unlikely to complete.
Deutsche Boerse’s shares were 2.1 per cent lower at 124.8 euros.
ANTI-TRUST REVIEW
LSE’s proposed deal is also expected to face a long antitrust review, four sources told Reuters.
Berenberg analysts said the size of the proposed deal makes a detailed competition review almost inevitable, with regulators likely to look at the impact of combining Refinitiv’s over-the-counter trading platforms with LSE’s clearing business.
“We do not anticipate any deal to fall foul of antitrust concerns,” the analysts said.