London Stock Exchange Group shares rose more than 15 percent to a record high on Monday as investors cheered its US$27 billion bid to buy financial data firm Refinitiv Holdings, Reuters reports.
Analysts believe the deal could transform the exchange operator into a global market infrastructure and data giant, and that it comes at an attractive price. Moreover, it is seen as posing less regulatory risk than previous failed tie-ups in the sector.
LSE has said negotiations for the deal — the largest ever attempted by an exchange operator per Refinitiv data — are at an advanced stage.
Refinitiv is owned by buyout fund Blackstone Group and Thomson Reuters Corp.
“A tie-up would give the combined entity the blend of market data and diagnostics, and news flow and analysis, that could present a material and formidable competitor for Bloomberg, which in recent years has become the preferred provider for many fund managers,” James Bevan, chief investment officer at fund manager CCLA, which has a small stake in LSE, was quoted as saying.
The proposed deal, which is valued at US$27 billion including debt, comes less than a year after Blackstone bought a majority stake in Refinitiv from Thomson Reuters in a US$20 billion deal. Thomson Reuters, the parent company of Reuters News, holds a 45 percent stake in Refinitiv.
Refinitiv had US$12.2 billion in debt as of the end of December, as a result of its leveraged buyout by Blackstone, which LSE would assume under the proposed deal.
LSE’s shares surged 15.3 percent on Monday to close at a record 6,562 pence. Refinitiv’s bonds, issued when Blackstone bought Thomson Reuters’ Financial and Risk business to form Refinitiv, also rallied across the curve.
A merger with Refinitiv would significantly expand LSE’s information services business, which the bourse operator has been building as a more stable source of cash flow than its primary transaction-reliant businesses, Reuters noted.
JP Morgan analysts said the deal will boost LSE’s data, analytics and distribution capabilities, and expand its footprint internationally, particularly in the United States.
It would also diversify LSE’s asset class mix, expanding its business in foreign exchange and fixed income.
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