Refinitiv, one of the world’s largest providers of financial markets data and infrastructure, today announces that its shareholders have agreed definitive terms with the London Stock Exchange Group plc (LSEG) under which LSEG will acquire Refinitiv in an all share transaction for a total enterprise value of approximately US$27 billion.
According to a news release from Refinitiv, the transaction will create “a leading, UK-headquartered, global financial market infrastructure (FMI) provider with a leading data and analytics business, significant capital market capabilities across multiple asset classes and a broad post-trade offering, well positioned for future growth”.
The transaction will result in Refinitiv’s shareholders – a consortium of investment funds affiliated with Blackstone as well as Thomson Reuters – ultimately holding an approximate 37% economic interest in LSEG and less than 30% of the total voting rights of LSEG. Subject to among other considerations, certain regulators not having objections to proposed nominees, Refinitiv shareholders will be entitled to nominate up to three non-executive directors to the LSEG Board, two of whom will be representatives of Blackstone and one a representative of Thomson Reuters.
Refinitiv’s shareholders will have an important investment in the combined business and have agreed to be subject to a lock-up for the first two years following completion of the transaction, expected in the second half of 2020. In each of years three and four following completion, Refinitiv’s shareholders will become entitled to sell one-third of the shares issued to them and the lock-up will terminate on the fourth anniversary of completion.
Refinitiv’s CEO David Craig will continue in his role and join LSEG’s Executive Committee. The combined business will be chaired by LSEG’s Chairman Don Robert and led by David Schwimmer, LSEG’s CEO with David Warren as LSEG’s CFO.
Commenting on the transaction, Craig says: “LSEG’s business is highly complementary with Refinitiv’s leading global data platform, transaction and distribution network. 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 LSEG team to create a leading financial markets infrastructure group and to continue to invest in our business,” Craig continues.
Refinitiv is one of the world’s largest providers of financial markets data and infrastructure, serving over 40,000 institutions in over 190 countries. It provides data and insights, trading platforms, and open data and technology platforms that connect global financial markets across trading, investment, wealth management, regulatory compliance, market data management, enterprise risk and fighting financial crime.
In its announcement about the deal today, LSEG released a statement that says the transaction will enhance LSEG’s existing customer offering by bringing together the information services through its financial indexing, benchmarking and analytical services, FTSE Russell; post-trade services through its global multi-asset CCPs, LCH and CC&G, and custody and settlement business; and capital markets through its broad range of international equity, fixed income and derivatives markets.
As well, it will include Refinitiv’s market data, analytics and execution capabilities are across asset classes and focus on four core customer segments; trading, investment and advisory, wealth, and risk management. In data and analytics, where Refinitiv is a leading provider of company, economic, deal, pricing and reference data, low latency real-time data and desktop analytics; in venues, including the FXall and Matching Foreign Exchange trading platforms and the Tradeweb fixed income trading platform (in which Refinitiv owns a majority interest); and in risk, where a range of products supports compliance and regulatory needs for a broad number of financial and corporate clients.
The combined business will be well-positioned in all key geographies and will offer significant customer benefits across the full range of LSEG’s businesses, the statement continues, by extending its trading capabilities across asset classes; expanding its data content, management and distribution capabilities; increasing its global footprint and range of customer offerings; and enabling LSEG, Refinitiv and their customers to benefit from future data and technology-enabled innovation and growth opportunities.
According to the LSEG statement, “Together, LSEG and Refinitiv generated combined annual revenue of over £6 billion in 2018, which would have made the combined business the largest listed global FMI provider by revenue last year.”
LSEG points to a number of financial highlights it foresees, including targeting delivery of revenue by the combined business at a compound annual growth rate of 5-7% over the first three years following completion of the transaction.