RiskTech Forum

London Stock Exchange agrees terms for acquisition of Refinitiv

Posted: 1 August 2019  |  Source: LSEG

London Stock Exchange Group plc (“LSEG”) announces that it has agreed definitive terms with a consortium including certain investment funds affiliated with Blackstone as well as Thomson Reuters (together the “Refinitiv Shareholders”) to acquire the Refinitiv business (“Refinitiv”) in an all share transaction for a total enterprise value of approximately US$27 billion (the “Transaction”). Blackstone’s consortium includes an affiliate of Canada Pension Plan Investment Board (“CPPIB”), an affiliate of GIC and certain co-investors (the “Blackstone Consortium”). The Transaction will result in the Refinitiv Shareholders ultimately holding an approximate 37 per cent economic interest in LSEG and less than 30 per cent of the total voting rights of LSEG.

The Transaction brings together two highly complementary businesses (the “Combined Business”) to create a leading, UK headquartered, global financial markets infrastructure (“FMI”) provider with a leading data and analytics business, significant capital markets capabilities across multiple asset classes, and a broad post-trade offering, well positioned for future growth in a fast evolving landscape.

The Transaction will enhance LSEG’s existing customer offering by bringing together:

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 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.

Together, LSEG and Refinitiv generated combined annual revenue of over £6 billion in 2018 (1,3), which would have made the Combined Business the largest listed global FMI provider by revenue last year.

Strategic highlights

The LSEG board (the “Board”) believes the Transaction will:

Financial highlights and outlook (2,4)

Other Key Transaction Terms

Governance and management

(i) three non-executive Board members (any such nominee being a “Refinitiv Director”) for as long as they hold at least 25 per cent of LSEG;

(ii) two Refinitiv Directors for as long as they hold at least 17.5 per cent but less than 25 per cent of LSEG; and

(iii) one Refinitiv Director for as long as they hold at least 10 per cent but less than 17.5 per cent of LSEG.

For so long as the Refinitiv Shareholders are entitled to nominate three Refinitiv Directors, one such nominee will be a representative of Thomson Reuters. The other two nominees will be representatives of Blackstone. LSEG will remain in compliance with the UK Corporate Governance Code following Completion.

Lock-up and standstill

Steps to Completion

(i) approval of the Transaction by LSEG shareholders (by ordinary resolution) at a general meeting (the “General Meeting”) of LSEG;

(ii) given the Transaction is classified as a Reverse Takeover under the Listing Rules of the FCA, the publication by LSEG of a prospectus (the “Prospectus”) and the FCA and London Stock Exchange agreeing to admit LSEG’s enlarged ordinary share capital to the premium listing segment of the Official List and to trading on the London Stock Exchange’s Main Market for listed securities;

(iii) there having been no breach of the representations and warranties that has had a material adverse effect on LSEG or Refinitiv between signing and Completion;

(iv) relevant competition approvals being obtained, including in the EU and the US; and

(v) relevant financial regulatory approvals being obtained, including in the UK, France, Italy and the US.

Commenting on the Transaction, Don Robert, Chairman, LSEG, said:

“This transaction is a defining moment for LSEG in terms of its strategic importance. It will create substantial value for our shareholders and important benefits for our customers, employees and other stakeholders. The Board and I look forward to welcoming Blackstone and Thomson Reuters as supportive, long-term shareholders as we work together to realise the compelling benefits of this transaction.”

Commenting on the Transaction, David Schwimmer, CEO, LSEG, said:

“With the acquisition of Refinitiv, we will transform our position as a leading global Financial Markets Infrastructure group. Refinitiv brings highly complementary capabilities in data and capital markets, as well as deep customer relationships across a truly global business. We share a commitment to open access and to partnering with our customers to deliver innovative solutions across the financial markets value chain. Our shareholders and customers will benefit from attractive top line growth prospects, substantial cost and revenue synergies, as well as ongoing efficiency initiatives, and this transaction will ensure we are well positioned for future growth in an evolving landscape.”

Commenting on the Transaction, Martin Brand, Senior Managing Director at Blackstone, said:

“Refinitiv has been an outstanding performer for Blackstone and our partners Thomson Reuters, CPPIB, and GIC. We believe the combination announced today creates a strongly positioned leader in financial markets infrastructure, and we are excited about the continued prospects of Blackstone’s investment as a long-term partner of LSEG.”

Commenting on the Transaction, David Craig, CEO, Refinitiv, said:

“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.”

Conference call details

LSEG will host a conference call for investors and analysts today at 09:30am (UK time).

To access the telephone conference call please pre-register using the following link and instructions below: http://emea.directeventreg.com/registration/5664169

Due to regional restrictions some participants may receive operator assistance when joining this conference call and will not be automatically connected.

Participants will be able to access the presentation slides by going to LSEG’s website using the following link: https://www.lseg.com/investor-relations/financial-reports-and-key-documents

A recording of the conference call will be available later today, after the conclusion of the call, available on the same section of LSEG’s website as above.