Blackstone et al. in talks to sell Refinitiv in $27bn deal

Francesca Veronesi
30 July 2019

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A consortium of backers including Blackstone have entered talks with the London Stock Exchange Group (LSEG) for the sale of London and New York-headquartered Refinitiv, a provider of financial data.

The sell-side consortium comprises Blackstone, Thomson Reuters, the Canada Pension Plan Investment Board (CPPIB), GIC Special Investments and other co-investors. In a statement, LSEG disclosed it would acquire Refinitiv for a total EV of approximately $27bn, with new LSEG shares to be issued as consideration in full for Refinitiv's equity value, after adjusting for Refinitiv's net debt and other adjustments.

The parties anticipate that the transaction will result in Refinitiv shareholders holding approximately 37% of the enlarged group and less than 30% of the total voting rights of LSEG.

The acquisition could offer significant synergies between LSEG and Refinitiv. LSEG monitors investment trends and the evolving regulatory landscape, and acquiring Refinitiv would expand its data and distribution capabilities, diversify its trading capabilities across asset classes, increase its global footprint, and expand its customer base.

The combined business would create a UK-headquartered financial market infrastructure provider. Combined 2018 annual revenues for LSEG and Refinitiv were £6bn.

LSEG believes that annual run-rate cost synergies in excess of £350m would be deliverable in the five years after completion. The buyer is expecting the transaction to deliver strong adjusted earnings per share accretion in the first full year after completion.

The parties are in advanced discussions regarding board membership, governance and other relationship agreement terms, including lock-up provisions. Should the transaction proceed, the Refinitiv shareholders intend to be supportive long-term shareholders in LSEG.

Under the transaction terms, LSEG would continue to be chaired by Don Robert and led by CEO David Schwimmer, with David Warren as CFO. The terms of any transaction remain subject to LSEG Board approval.

A consortium led by Blackstone, including CPPIB and GIC, carved-out from Thomson Reuters the Thomson Reuters' Financial & Risk (F&R) business in Q3 2018 (which subsequently rebranded to Refinitiv). The transaction, valued at $20bn, saw the Blackstone-led consortium acquire 55% of the equity in a new corporation created to hold the business, and Thomson Reuters retain a 45% stake.

Refinitiv is a provider of financial data and infrastructure, delivering data, insight and analytics related to investment and advisory, trading, wealth, and risk management. It serves 40,000 customer institutions across 190 countries including buy- and sell-side firms, market infrastructure companies, governments, financial technology firms and corporations.

The Refinitiv Data Platform has 150,000 data sources, and is a provider of real-time pricing, reference data, private and public company information, and events, commodity, economic, quantitative and research data. The business is headquartered in London and New York.

Unquote's sister publication Mergermarket has reported that Barclays, Goldman Sachs, Morgan Stanley and Robey Warshaw are financial advisers to the bidder. Freshfields Bruckhaus Deringer is advising the buy side on legal matters.

On the other hand, Canson Capital Partners and Evercore are advising the sell side, with Simpson Thacher & Bartlett acting as the legal adviser, the publication also reported. Guggenheim Partners is also advising Thomson Reuters.