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London Stock Exchange to Buy Refinitiv for $27 Billion London Stock Exchange to Buy Refinitiv, a Data Provider
(about 3 hours later)
LONDON — The London Stock Exchange Group agreed on Thursday to buy Refinitiv, the financial information service, for about $27 billion as it seeks to enter the lucrative business of market data and compete with giants like Bloomberg L.P. LONDON — For more than 300 years, the London Stock Exchange has been one of the world’s most enduring symbols of capitalism. But offering a market for trading shares is not enough for stock exchanges these days.
It is a sign of how stock markets — even the centuries-old London exchange, one of the oldest in the world — must venture beyond company listings to grow profits. Financial data, the lifeblood of the trading industry, has emerged as a big avenue for such growth. On Thursday, in a sign of how the business has changed, the London exchange’s parent company agreed to buy Refinitiv, a big provider of financial data, for about $27 billion, including debt.
By buying Refinitiv, a former arm of Thomson Reuters that is now controlled by the investment giant Blackstone and others, the London exchange would be able to sell market information around the world. The British company hopes that the deal will make it a key cog of the plumbing that underpins the financial industry. Market data, the lifeblood of the trading industry, has emerged as a big avenue for growth. The all-stock deal to acquire Refinitiv, a former arm of Thomson Reuters that is now controlled by the investment giant Blackstone and others, will put the London Stock Exchange Group in competition with giants like Bloomberg L.P.
“With the acquisition of Refinitiv, we will transform our position as a leading global financial markets infrastructure group,” David Schwimmer, the chief executive of the London Stock Exchange Group, said in a statement. Exchange operators in the United States — including Intercontinental Exchange, which owns the New York Stock Exchange, and Nasdaq — have counted on market data as an important source of sales to stock brokerages and other institutions, with revenues now rivalling those of traditional stock market services.
Some exchanges have been accused by customers of excessively raising the prices they charge. Last year, the Securities and Exchange Commission denied requests by the New York Stock Exchange and Nasdaq to raise fees on some sets of that information.
The London Stock Exchange will gain Refinitiv’s Eikon division, which sells terminals that allow customers to pull up an array of financial data and message with others.
Together, the London exchange and Refinitiv collected about 6 billion pounds, or $7.3 billion, in sales last year.
“With the acquisition of Refinitiv, we will transform our position as a leading global financial markets infrastructure group,” David Schwimmer, who has served as the chief executive of the London Stock Exchange Group for about a year, said in a statement.
Shares in the London Stock Exchange Group rose more than 7 percent in trading on Thursday.Shares in the London Stock Exchange Group rose more than 7 percent in trading on Thursday.
But the deal puts the London exchange up against big and well-entrenched competitors. Other market operators — including the IntercontinentalExchange, which owns the New York Stock Exchange — already have global presences and robust market data offerings. But the deal puts the London exchange up against big and well-entrenched competitors. Both the New York Stock Exchange and Nasdaq already have global presences and robust market data offerings.
Refinitiv’s Eikon data terminal business has long lagged that of Bloomberg, the undisputed leader of that industry. Refinitiv’s Eikon data terminal division has long lagged that of Bloomberg, the undisputed leader of that industry. Despite charging customers roughly $20,000 per terminal, Bloomberg controls what analysts have estimated is roughly a third of the market.
And analysts expect the Refinitiv transaction to face heavy regulatory scrutiny.And analysts expect the Refinitiv transaction to face heavy regulatory scrutiny.
Still, if it closes, the deal would be a notable success for the London exchange after years of trying to strike other acquisitions. Two years ago, European antitrust regulators blocked the company from merging with the Deutsche Börse Group, which would have created a market operator with enormous sway across the Continent.Still, if it closes, the deal would be a notable success for the London exchange after years of trying to strike other acquisitions. Two years ago, European antitrust regulators blocked the company from merging with the Deutsche Börse Group, which would have created a market operator with enormous sway across the Continent.
And nearly a decade ago, the London exchange tried to combine with the Toronto Stock Exchange. That merger fell apart after the Canadian company’s shareholders threatened to vote it down.And nearly a decade ago, the London exchange tried to combine with the Toronto Stock Exchange. That merger fell apart after the Canadian company’s shareholders threatened to vote it down.
Thursday’s transaction would be a quick and lucrative win for Refinitiv’s majority owners, led by Blackstone. That consortium bought control of Refinitiv last year at a $20 billion valuation. Thomson Reuters kept a 45 percent stake in the business.Thursday’s transaction would be a quick and lucrative win for Refinitiv’s majority owners, led by Blackstone. That consortium bought control of Refinitiv last year at a $20 billion valuation. Thomson Reuters kept a 45 percent stake in the business.
Under the terms of the deal, the Blackstone-led group will become the biggest shareholder in the London exchange, with the right to name three directors.Under the terms of the deal, the Blackstone-led group will become the biggest shareholder in the London exchange, with the right to name three directors.