The Financial Conduct Authority (FCA) has accepted the proposal given to them by the London Stock Exchange Group’s (LSEG) to acquire the financial data provider, Refinitiv. The all-stock acquisition, proposed for a hefty $27 billion, has achieved one of the first hurdles in order to see it through. The announcement from LSEG to buy Thomson Reuters’ former financial and risk company came in August.
A New Step For
LSEG gave an official statement that the FCA’s Listing Transaction Department has officially approved the company’s shareholder circular in terms of the acquisition transaction.
The statement continues in speculating that the LSEG expects the deal to run its course after the second quarter of 2020. LSEG is being smart about the matter, though, with the operator seeking more approvals. By doing so, they plan to avoid missteps as the UK’s other operators are probably going to scrutinize the takeover in terms of the potential impact it has on market data costs.
After the regulator gave its approval, LSEG is already moving in to capitalize on it. The group has already scheduled a general meeting for the 26th of November to discuss the deal’s approval. Should they manage to pull the acquisition off, the company will be catapulted into leagues alongside the giants of finance like Bloomberg.
Refinitive Takes the Lead
With the move, Refinitiv will own 37% of the newly formed group. Thomson Reuters, the former owner of Refinitiv, will also have a 15% hold in the company. As one of the newly formed group’s most significant shareholders, Refinitiv will be allowed to name three directors in LSEG.
LSEG considers Refinitiv to be something that has a lot of overlap in their respective areas. Things like property, corporate functions, and financial technology will allow for the data generated by the exchange to be combined with Refinitiv’s analytics and distribution. The two companies will fit into each other like a hand putting on a glove.
The takeover also strengthens Thomson Reuter’s profit metrics. The reason for this being the positive revaluation of the company’s warrants they hold in Refinitiv after the company’s acquisition by LSEG.
Bloomberg’s Renewed Rival
Refinitiv stands in direct opposition to Bloomberg by way of their Eikon terminals. The company went private in October 2018 due to Thomson Reuters selling its majority shares in the company. It was bought up by a consortium headed by the Blackstone Group, a private equity firm, for $20 billion. Reuters kept a 45% stake in the business afterward.
An Amusing Note
The LSEG tried to enact a merger with fellow financial giant, Deutsche Boerse some two years ago. However, antitrust regulators blocked the move due to monopoly concerns. Having two of the largest stock exchange operators in Europe, joining up would be a rather fearful sight indeed.