By Pamela Barbaglia and Imani Moise
LONDON / NEW YORK (Reuters) – London Stock Exchange Group Plc (L:) sa on Friday, it was in discussions to acquire financial data analysis provider Refinitiv Holdings Ltd for $ 27 billion, including debt.
The deal would come less than a year after the acquisition company Blackstone Group Inc (N 🙂 bought a majority stake in Refinitiv from Thomson Reuters Corp. (TO :), and valued the company at that time to $ 20 billion included debt.
LSE said it would pay for the deal with newly issued LSE shares as a currency and convert Refinitiv's existing investors into LSE shareholders who would own approximately 37% of the total company and have less than 30% of the voting rights.
Thomson Reuters, a professional information company that is the parent of Reuters News, currently holds a 45% stake in Refinitiv. It confirmed the negotiations in a statement and said it would own a 1
Based on the valuation the deal would assign to Refinitive, Blackstone would roughly double the value of the original investment in the company, according to a person familiar with the case, requesting anonymity because the private equity firm holds that number confidentially.
Refinitive had debt of $ 12.2 billion at the end of December as a result of the exploited acquisition of Blackstone, which the LSE would assume under the proposed agreement.
LSE and Thomson Reuters both warned that there is no certainty that discussions between the parties will go ahead or that a transaction will come. One person who was familiar with the case said on Friday that if the negotiations were terminated, an agreement could be agreed upon next week.
Refinitive did not immediately respond to a request for comment, while Blackstone refused to comment.
Refinitive bonds met on the prospect of an agreement.
Thomson Reuters shares beat record highs to finish trading on Friday up 4.5% to $ 92.74 in Toronto after the Financial Times first reported the deal. The stock is up 62% since the end of January 2018, when Blackstone and Thomson Reuters announced the Refinitiv agreement.
A merger will significantly expand LSE's information service business, which the bourse operator has built as a more stable source of cash flow than its primary transaction-related businesses.
"The global exchanges focus more and more on data and technology as revenue drivers, and less on the actual match of purchases and sales," said Kevin McPartland, market structure manager and technology research at Greenwich Associates.
LSE operates equity and derivatives markets that include the London Stock Exchange, Borsa Italiana, MTS and Turquoise. There is also a majority shareholder in LCH, which dominates the clearing of euro swaps. The information service business includes financial indexing, benchmarking and analysis services.
The company has a market capitalization of around £ 19.3 billion (£ 23.9 billion) and a net debt of about £ 1 billion.
LSE chief David Schwimmer is a former Goldman Sachs Group Inc (N 🙂 banker of 20 years who has raised the expectations of big deals.
Several times, LSE has failed to merge with rival Deutsche Boerse AG (DE :). Schwimmer was appointed CEO in August last year after LSE's last attempt to make an agreement with Deutsche Boerse failed.
Buying Refinitive can help soften the blowing of the LSE from a market volatility attack expected if the UK were to leave the EU within a deadline of 31 October without an exit agreement.
Last month, Schwimmer said that LSE was "very prepared" for Brexit. The exchange had to open an EU base in Amsterdam for Turquoise, its London-based pan-European stock trading platform.
London-based refinitive dealer financial markets data and infrastructure to more than 40,000 customers in over 190 countries, according to the website.
It caters to merchants and investment professionals, who also use LSE's stock exchanges, the largest client for news on Reuters News during a 30- annual contract signed last year.
In its statement on Friday, Thomson Reuters said that this contract will continue if Refinitiv's ownership change changes.
During Blackstone's majority owner, Refinitiv has lost assets outside the core. Tradeweb Markets Inc (O :), an electronic trading platform for bonds and derivatives.
It has also been in conversations with Deu tsche Boerse to sell its foreign exchange electronic trading platform FXall.
Private equity companies like Blackstone aim to buy businesses so that they can sell them later on, usually between three and five years later.
An agreement with the London Stock Exchange for Refinitiv so shortly after the carving out of Thomson Reuters could prove to be a quick and profitable flip for Blackstone, which last week said the assets reached record $ 545 billion.
Blackstone's consortium holding a 55% stake in Refinitiv includes Canada Pension Plan Investment Board and Singaporean sovereign wealth fund GIC Special Investments Pte Ltd.