The London Stock Exchange Group (LSEG) has confirmed that it is in “advanced discussions” to buy Refinitiv for around $27 billion, including around $12.2 billion in debt. These discussions are regarding Board membership, governance and other relationship agreement terms including lock-up provisions, which reflect a long-term partnership.
In a statement LSEG says new LSEG shares will be issued as consideration in full for Refinitiv’s equity value, after adjusting for Refinitiv’s net debt and other adjustments. It adds the parties anticipate that the transaction would result in the Refinitiv Shareholders holding an approximately 37 per cent stake in the enlarged group and less than 30 per cent of the total voting rights of LSEG.
LSEG also says that it is considering the deal because 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,” it states.
The statement continues, “LSEG believes that a potential transaction would offer significant customer benefits across the full range of LSEG’s businesses by: expanding its data and distribution capabilities; diversifying its trading capabilities across asset classes; increasing its global footprint and deepening customer reach; and enabling LSEG, Refinitiv and their customers to benefit from future data- and technology-enabled growth opportunities. The combined business would create a leading, UK headquartered, global financial market infrastructure provider with significant multi-asset capital markets capabilities, a leading data and analytics business and a broad post- trade offering, well positioned for future growth in an evolving landscape.”
Should such a deal go through, the combined entity would be the largest listed global financial markets infrastructure provider by revenue, with combined annual revenues of over £6 billion in 2018 and, LSEG says, would be well positioned to deliver “attractive top line growth over the medium-term”.
In addition, LSEG says it believes that annual run-rate cost synergies in excess of £350 million would be deliverable in the five years after completion and that the transaction would deliver strong adjusted earnings per share accretion in the first full year after completion.
Under the transaction terms, LSEG would continue to be chaired by Don Robert and led by David Schwimmer, chief executive officer, with David Warren as chief financial officer.