Sunday 28 July 2019 7:00 pm

London Stock Exchange in talks to buy data analytics firm Refinitiv for $27bn

The London Stock Exchange Group (LSE) is in discussions to buy data analytics firm Refinitiv for $27bn (£22bn) in a blockbuster deal that could see the company take on Bloomberg.

The exchange group confirmed it is in talks with Thomson Reuters and a consortium of funds linked to private equity firm Blackstone to acquire the markets data provider.

Read more: Financial data platform Refinitiv Eikon suffers ‘major incident’ before London market opening

LSE said it would fund the merger with newly-issued shares, giving Refinitiv investors a stake in the exchange company. The deal would give Refinitiv shareholders ownership of roughly 37 per cent of the enlarged group, with less than 30 per cent of the voting rights.

The talks are said to be at an advanced stage, with an announcement expected within a week. However, the deal is expected to face an antitrust review, which could last up to 18 months, Reuters reported, citing sources.

Regulators in both the US and the EU are likely to open probes into the merger over concerns it could harm competition. The EU inquiry is likely to go into a Phase II investigation, according to the sources, amid concerns it could affect the price of financial data.

Don Robert would continue to chair the new London-based company, while David Schwimmer and David Warren would remain in their roles as chief executive and chief financial officer respectively.

“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,” LSE said in a statement.

The move, first reported by the Financial Times, would come less than a year after Blackstone bought a majority stake in Refinitiv from Thomson Reuters for $17.3bn.

A takeover would transform LSE into a key player in the financial data sector and a competitor to the Bloomberg Terminal, which provides market data, news and research.

Refinitiv’s services, which include the Eikon and Tradeweb platforms, are used by more than 40,000 institutions worldwide.

The combined group would have revenue of more than £6bn, and LSE said it hoped a takeover would create cost savings of £350m per year.

Based on the value of the deal, Blackstone will have roughly doubled the value of its original investment in Refinitiv, Reuters reported, citing a source familiar with the matter.

Blackstone would become LSE’s largest shareholder, while Thomson Reuters said the deal would give it a 15 per cent stake in the company. However, the limiting of voting rights to less than 30 per cent would allow the firms to sidestep City rules forcing them to make a takeover bid for the whole of LSE.

Sources said the deal was unlikely to be a “quick flip”, as Blackstone plans to keep investing in the newly-formed company for at least another three to four years. A merger with the LSE has reportedly been under consideration since Blackstone took a majority stake in Refinitiv last year.

In addition to the London Stock Exchange, LSE also controls Borsa Italiana and specialist trading platforms such as Turquoise. The company has enjoyed strong trading in recent months, with shares rising more than 25 per cent since January.

A merger would mark LSE’s first major deal since its proposed £21bn merger with Deutsche Borse was blocked by EU regulators in 2017.

Read more: London Stock Exchange acquires ESG data provider Beyond Ratings

LSE warned there was no certainty that the talks will progress or that a deal will be reached.

Goldman Sachs, Morgan Stanley and Robey Warshaw are all said to be working with LSE on the deal.

Main image credit: Getty