Speculation has been ramping up in recent days on an impending big acquisition deal in the institutional FX space. German exchange Deutsche Borse was reported to be looking into buying the FXall unit of Refinitiv (formerly Thomson Reuters). After days of speculation, the company issued an official confirmation early this morning to confirm ongoing negotiations.
According to the statement published on the website of the German exchange giant, the firm is indeed in talks with Refinitiv about “the potential purchase of certain FX business units.” While the negotiations between the firms are ongoing, the company also outlined that the purchase price speculations of an impending $3.5 billion deal are “entirely unfounded.”
The latest valuation of the FXall unit was circa 2012 when Thomson Reuters acquired the company for $625 million. Since then trading volumes executed on the platform have grown materially, however.
An exclusive Euronews report yesterday cited people familiar with the matter for the $3.5 billion deal.
360T and GTX ECNs
Deutsche Börse appears to be on track to become one of the biggest players in the foreign exchange market after having acquired not one but two major subsidiaries in the space. The company acquired 360T back in July 2015 for €725 million.
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Last year, the German exchange also purchased GTX from GAIN Capital for $100 million. The deals are representative of the interest of Deutsche Börse in this space.
The leveraged buyout deal of Refinitiv executed between Blackstone and Thomson Reuters left the company with circa $13.5 billion in debt. Any sale to Deutsche Börse will materially boost the company’s presence in the FX market.
As of February, the average daily trading volumes transacted via the 360T foreign exchange subsidiary of the company, which also includes GTX totaled €72.8 billion per day. The number was higher by 19 percent when compared to February last year. The average for 2019 is €74.0 billion daily, 21 percent higher when compared to 2018’s €61.1 billion per day.
FXall and TR Matching on the Cards?
With the company refuting the price that it intends to pay for the FXall business of Refinitiv, the rumored deal could also include Thomson Reuters Matching, which is the other FX platform the company owns.
With the official statement from Deutsche Börse mentioning “businesses” (plural), the German exchange could be aiming big for a total take over of Refinitiv’s foreign exchange-related assets. That said, this is merely speculation as the ongoing negotiations between the companies continue.