The deal would come less than a year after Blackstone Group acquired a majority stake in Refinitiv from Thomson Reuters Corp, valuing the company at $20 billion including debt. LSE said it would pay for the deal with newly issued LSE shares, which could turn Refinitiv’s current investors into LSE shareholders with about 37 percent of the combined company. They would also hold less than 30 percent of the voting rights.
Refinitiv head David Craig will continue leading the financial data firm as an independent brand within LSE.
Thomson Reuters currently holds a 45 percent stake in Refinitiv, and will own a 15 percent stake in LSE if the deal goes through. If the transaction is successful, Blackstone will have roughly doubled the value of its original investment in Refinitiv in just nine months.
Refinitiv had $12.2 billion in debt at the end of last year due to its leveraged buyout by Blackstone. LSE will be taking on that debt under the proposed deal.
A source told Reuters that a deal could be agreed upon next week if the negotiations are successful. However, four sources told Reuters that antitrust regulators in Europe and the United States will likely start an extensive review which could last up to 18 months.
LSE operates equity and derivatives markets including the London Stock Exchange, Borsa Italiana, MTS and Turquoise. It has also expanded into the information services business including financial indexing, benchmarking and analytics services. The Refinitiv deal would significantly boost that side of its business.
“The global exchanges are focusing more and more on data and technology as revenue drivers, and less on the actual matching of buys and sells,” said Kevin McPartland, head of market structure and technology research at Greenwich Associates.