Unequal exchange

1 August 2019 By John Foley Follow @johnsfoley

If the financial data provider clinches a $27 bln takeover by the London Stock Exchange, the buyout firm will make a handsome return. Yet an insurance policy designed to protect its downside works in its Canadian co-investor’s favour. Thomson Reuters may almost triple its money.

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London Stock Exchange Group confirmed on Aug. 1 that it had agreed to acquire financial data provider Refinitiv for $27 billion, including debt.

LSE said it would issue shares to Refinitiv’s owners, a group that includes funds controlled by private equity giant Blackstone Group as well as Thomson Reuters, which owns Breakingviews. After the deal those investors would own about 37% of LSE’s enlarged share capital, though they would limit their voting rights to less than 30%.

A consortium led by Blackstone in 2018 acquired a 55% stake in Thomson Reuters’ financial data division, subsequently renaming the business Refinitiv. The business generated revenue of $6.3 billion and EBITDA of $1.6 billion in 2018.

LSE shares were trading at 70.22 pounds at 0930 GMT on Aug. 1, 24% higher than their closing price on July 26, the day talks with Refinitiv were announced.

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