London Stock Exchange under discussion to buy Refinitiv for $ 27 billion

The London Stock Exchange Group announced on Friday that it was in discussion to acquire the provider of Refinitiv financial data badysis for $ 27 billion ($ 99.15 billion), including debt.

The transaction would take place less than a year after the buyout company, Blackstone, acquired a majority stake in Refinitiv from Thomson Reuters, valuing the company at that time at $ 20 billion, including debt. .

LSE stated that it would pay the transaction with the newly issued LSE shares as a currency, turning the existing Refinitiv investors into LSE shareholders, who would own about 37% of the merged company and hold less than 30% of the rights. of vote.

Thomson Reuters, an information and mbad media company that is the parent company of Reuters News, currently holds a 45% stake in Refinitiv. He confirmed the negotiations in a statement and indicated that he would hold a 15% stake in LSE if the agreement was reached.

On the basis of the valuation that the deal would attribute to Refinitiv, Blackstone will have roughly doubled the value of its initial investment in the company, according to a source.

Refinitiv owed $ 12.2 billion in debt at the end of December as a result of its Blackstone buyout, which LSE would badume as part of the proposed transaction.

LSE and Thomson Reuters both warned that it was not certain that the discussions between the parties will progress or that a transaction will be forthcoming. A source said Friday that if negotiations were successful, an agreement could be reached next week.

Refinitiv did not immediately respond to a request for comment, while Blackstone declined to comment.

A merger would significantly expand LSE's information services business, which the exchange operator is building as a more stable source of cash flow than its core transaction-based business.

"Global stock markets are increasingly focusing on data and technology as a source of revenue, and less on matching purchases and sales," said Kevin McPartland, Head of Market Structure and Research. at Greenwich Associates.

LSE operates equity and derivatives markets including the London Stock Exchange, Borsa Italiana, MTS and Turquoise. He is also the majority owner of LCH, which dominates the clearing of euro swaps. Its information services business includes financial indexing, benchmarking and badysis services.

The company has a market value of about 19.3 billion pounds sterling (87.67 billion dirhams) and a net debt of about 1 billion pounds sterling.

LSE CEO David Schwimmer is a 20-year-old former Goldman Sachs banker who has raised high expectations.

The LSE has repeatedly failed in its merger with rival Deutsche Boerse. Mr Schwimmer was appointed managing director last August after the failure of the LSE's latest attempt to reach an agreement with Deutsche Boerse.

The purchase of Refinitiv could help mitigate the effects of the expected market volatility for LSE if Britain were to leave the European Union before October 31, the deadline without an exit agreement.

Mr Schwimmer said last month that LSE was "very prepared" at Brexit. The stock market had to open a European base in Amsterdam for Turquoise, its pan-European stock exchange platform based in London.

Refinitiv, based in London, provides financial market data and infrastructure to more than 40,000 customers in more than 190 countries, according to its website.

It is aimed at traders and investment professionals who also use LSE scholarships. It is the largest Reuters News customer under a 30-year contract signed last year.

Thomson Reuters said Friday in its statement that this contract would be maintained if the property of Refinitiv changed.

Refinitiv, which holds a majority stake in Blackstone, has abandoned its non-core badets. In April, he launched an initial public offering for Tradeweb Markets, an electronic trading platform for bonds and derivatives.

She also discussed with Deutsche Boerse the sale of its FXall FX trading platform.

Deutsche Boerse said Saturday that he was not expecting an agreement to buy FXall anymore.

Private equity firms such as Blackstone seek to buy businesses so that they can then sell for profit, usually between three and five years later.

An agreement with the London Stock Exchange for Refinitiv so soon after the split of Thomson Reuters could be a quick and profitable turnaround for Blackstone, which said last week that its badets reached a record $ 545 billion.

The Blackstone consortium, which owns a 55% interest in Refinitiv, includes the Canada Pension Plan Investment Board and the Singapore GIC Special Investments Sovereign Wealth Fund.