© Reuters. An advertisement for Refinitiv is shown on a screen in London's financial center Canary Wharf
By Pamela Barbaglia and Imani Moise
LONDON / NEW YORK (Reuters) – The London Stock Exchange Group Plc (L:) said on Friday, it was in talks to acquire the financial data analyst firm Refinitive Holdings Ltd for $ 27 billion, including debt.
The deal would be completed less than a year after the acquisition of Blackstone Group Inc's (N 🙂 majority shareholding in Thomson Reuters Corp (TO :), with a value of $ 20 at that time Billions including debt.
LSE announced that it would pay for its newly issued LSE shares as a currency and transformed Refinitiv's existing investors into LSE shareholders, which own approximately 37% of the combined company and hold less than 30% of the voting rights
Thomson Reuters, a professional information company, which is the parent company of Reuters News, currently has a 45% stake in Refinitiv. She confirmed the negotiations in a statement and said she would hold a 1
On the basis of the valuation that the transaction would represent for Refinitive, Blackstone would have approximately doubled the value of its original investment. The company, as a person familiar with the matter, requested anonymity, as the private equity firm kept this number confidential treated.
At the end of December, Refinitive had $ 12.2 billion of debt due to the leveraged buy-back by Blackstone, which LSE would accept as part of the proposed deal.
Both LSE and Thomson Reuters warned that there is no certainty that there will be discussions between the parties or that a transaction is imminent. A person familiar with the matter said on Friday that if the negotiations were successfully concluded, agreement could be reached next week.
Refinitive did not immediately respond to a request for comment while Blackstone refused to comment.
Refinanced bonds rallied on the prospect of a deal.
The Thomson Reuters share reached a record high on Friday, rising 4.5% to $ 92.74 in Toronto after the Financial Times first reported on business negotiations. The stock rose 62% since the end of January 2018, when Blackstone and Thomson Reuters announced the deal for Refinitive.
A merger would significantly expand LSE's information services business, which the stock exchange operator has developed as a more stable cash flow source than its primary transaction-based business.
"Global stock markets are increasingly focusing on data and technology as a revenue driver and less on the actual reconciliation of purchases and sales," said Kevin McPartland, Market Structure and Technology Research Leader, Greenwich Associates.
LSE operates equity and derivatives markets, including the London Stock Exchange, Borsa Italiana, MTS and Turquoise. It is also the majority shareholder of LCH, which dominates the clearing of euro swaps. The information services business includes financial indexing, benchmarking and analytics services.
The company has a market value of approximately 19.3 billion pounds (23.9 billion US dollars) and a net debt of approximately 1 billion pounds.
David Schwimmer, Chief Executive of LSE, is a former Goldman Sachs Group Inc (N 🙂 banker of 20 years, who has sparked expectations of big business.
The LSE has failed several times to unite with the rival Deutsche Börse AG (DE :). Schwimmer was named CEO last August after LSE's recent attempt to make a deal with Deutsche Börse failed.
The purchase of Refinitiv could help mitigate LSE's impact against expected market volatility if Britain leaves the European Union by 31 October without an exit agreement.
Schwimmer said last month that LSE was "very" prepared for Brexit, which had to open an EU base in Amsterdam for Turquoise, the London-based pan-European stock trading platform.
Refinutive with Based in London, London has financial market data and infrastructure for more than 40,000 customers in more than 190 countries.
It is targeted at traders and investment professionals who also use the LSE exchanges and is Reuters' biggest news customer News as part of a 30-year contract signed last year.
Thomson Reuters stated in his statement on Friday that this contract will continue when the ownership of Refinitive changes.
Under Blackstone's majority holding, Refinitiv has Non-core assets were disposed of In April, it launched an initial public offering of Tradeweb Markets In c (O :), an electronic trading platform for bonds and derivative instruments.
She was also in talks with Deutsche Börse on the sale of her foreign exchange electronic trading platform FXall.
Private equity firms such as Blackstone want to buy businesses, then sell them for a profit, usually three to five years later.
A deal on the London Stock Exchange for Refinitiv, soon after the spin-off of Thomson Reuters, could turn out to be a quicker and more profitable way for Blackstone.
The Blackstone consortium reached a record 545 billion US dollars at 55% last week. Refinitive includes the Canada Pension Plan Investment Board and the Singaporean sovereign fund GIC Special Investments Pte Ltd.