London Stock Exchange today said it expects to close its proposed $27 billion acquisition of financial data provider, Refinitiv on 29 January 2021. The mega-merger is still subject to additional regulatory approvals, but the LSEG expects the green light from outstanding scrutiny and merger control shortly.
Refinitiv’s existing shares will be written-off from the London Stock Exchange’s Main Market and then re-submitted under the new ticker at 8:00 am on 29 January 2021. The exchange intends to reapply for admission on its own market as the Refinitiv deal constitutes a reverse takeover under the UK’s listing rules.
The news comes after the European Commission, which oversees competition policy in the 27-nation bloc, approved the all-stock deal back in December.
The EU antitrust watchdog said its investigation had raised a number of concerns about the deal, but these issues could be addressed by a number of remedies.
Additionally, Regulators cited the complexity and the massive amount of data involved in the deal, which would result in a “very large combined market share” in the electronic trading of European government bonds. And, as Refinitiv and LSE have been leading venues, close rivals in this space, it initially suggested that it will be difficult for a new trading venue to attract clients in sufficient numbers and become a real alternative to their combined business.
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European competition authorities, which had previously proved to be an obstacle for cross-border alliances, had been concerned that the tie-up would give the combined entity too much control over market data. To ease such concerns, LSE agreed to offer its global OTC derivatives clearing services on an open-access basis, among other remedies.
Refinitiv To Become Biggest Shareholder in LSE
Both UK and US regulators cleared the all-stock deal, which was revealed in August 2019. The Committee on Foreign Investment in the United States (CFIUS) said the takeover does not raise any national security concerns. Moreover, the City watchdog gave the purchase offer’s circular its backing, and LSEG’s shareholders have overwhelmingly voted in favor of the institution’s planned buyout that will put them in competition with giants like Bloomberg.
Under the terms of the deal, the Blackstone-led Refinitiv will own 37 percent of the combined group, while its former owner, Thomson Reuters, will be holding a 15 percent stake. It would become the biggest shareholder in the London exchange, with the right to name three directors.
LSE said there is a lot of overlap with Refinitiv in areas including technology, property and corporate functions, which allows for combining the data generated by the exchange with Refinitiv’s distribution and analytics.
Furthermore, the takeover helped strengthen Thomson Reuters’ profit metrics due to the positive revaluation of warrants that the company holds in Refinitiv after LSEG’s offer.