London Stock Exchange’s $27bn acquisition of Refinitiv

By Dimitrios Apostolopoulos (University of Warwick), Jo-Emma Berthet (King’s College London) and Iulian Pavăl (Bocconi University) - Date: 24/08/2019

Overview of the deal

  • Acquirer: London Stock Exchange Group

  • Target: Refinitiv

  • Estimated value: $27bn

  • Announcement date: 27/07/2019

  • Acquirer Advisors: Goldman Sachs, Morgan Stanley, Barclays, Robey Warshaw

  • Target Advisors: Evercore, Canson Capital Partners, Jefferies

UK-based global financial market infrastructure (FMI) operator LSE has acquired US-based data platform, transaction and distribution network Refinitiv in an all-share undertaking for a total enterprise value of approximately £22.2bn ($27bn). Given that both companies have complementary businesses and a similar ‘open access’ approach, the deal has a clear, strategic rationale. This should strengthen LSE’s position as a leading provider of FMI on an international scale, enabling the firm to capitalise on fast-growing markets such as Asia, in the context of increasing demand for data due to more rigorous regulatory requirements. The deal will shift LSE away from erratic trading revenue streams, which are being threatened by the rise of automated trading, to fee-based activity and differentiate it from peers including Nasdaq, Deutsche Borse, ICE and CME.  

The transaction forms part of LSE’s diversification drive, after acquiring French ESG data provider ‘Beyond Ratings SAS,’ in June 2019, to expand its sustainable investment capabilities. The deal is expected to achieve £350m ($425.3m) of cost synergies after five years. Despite this industry-consolidation move, competing financial data and infrastructure firms, including Bloomberg’s iconic terminals, remain key market players, posing a threat to LSE’s latest expansions. 

In the wake of the deal, Refinitiv’s CEO will keep his current position and join the LSE’s executive committee. Also, the firm’s owners will hold a 37% stake in LSE and less than 30% of total LSE voting rights, with three non-executive directors coming from Refinitiv. 

 “LSE’s plan to acquire Refinitiv, a global financial data and trading platform provider, makes good sense, we believe, and would accelerate its strategic shift toward data.” – Bloomberg Intelligence, July 2019

Company Details (London Stock Exchange Group) 

The London Stock Exchange Group is a global financial markets infrastructure business covering Capital Markets, Post-trade services, Information and Technology Services. The LSE Group is the UK’s primary stock exchange, and its subsidiaries include the Milan Stock Exchange (Borsa Italiana), Frank Russell Company, FTSE International and Millennium IT. The group provides a range of information and data products including indexes, benchmarks and real-time pricing data. The Refinitiv deal announcement coincides with the LSE’s half-year results, which revealed total revenue increased 7% to £1.02bn ($1.24bn). 

- Founded in 2007, headquartered in London, UK.

- CEO:  David Schwimmer

- Number of employees: 4,400 (2018)

- Market Cap: $28,374m       -EV: $29,830m

- LTM Revenue: $2,866m      -LTM EBITDA: $1,396m

- LTM EV/Revenue: 11.14x    -LTM EV/EBITDA: 22.93x

Company Details (Refinitiv)  

Refinitiv is a privately-held global financial data analysis and trading platform provider, serving over 40,000 institutions in over 190 countries. The firm delivers data, insight and analytics across four customer segments: investment and advisory, trading, wealth, and risk management. Refinitiv’s Eikon terminals give access to up-to-date asset prices and trades, alongside its trading-execution system Redi. The firm was formed in 2018 after Reuters divested its Financial & Risk business to Blackstone for £16.46bn ($20bn), renaming it Refinitiv and it is jointly owned by Blackstone Group and Thomson Reuters. The firm also owns a majority stake in Tradeweb, the world’s largest over-the-counter rates trading platform.

- Founded in 2018, headquartered in London, UK and New York City, US.

- CEO:  David Craig

- Number of employees: 18,500 (2018)

- Market Cap: $54,793                -EV: $72,652

- LTM Revenue: $5,772m           -LTM EBITDA: $3,960

- LTM EV/Revenue: 12.59x         -LTM EV/EBITDA: 9.48x