Tech firms that serve banks are going through the same M&A upheavals that the institutions they cater for have experienced since before the 2008 financial crisis. The Refinitiv-LSEG deal has now completed.
The London Stock Exchange Group’s purchase of data provider Refinitiv from Thomson Reuters and a group of private equity funds has been completed, the parties said late last week. The $27 billion purchase, as discussed in detail here, is one of the biggest shifts in the competitive landscape for years.
The all-share transaction was originally inked in August 2019. Refinitiv is Thomson Reuters’ former Financial & Risk business, a majority interest in which was sold to Blackstone's consortium in October 2018.
As of the deal's closing, Thomson Reuters indirectly owns 82.5 million LSEG shares, which have a market value of about $9.8 billion, based on LSEG's closing share price on 28 January, 2021.
Thomson Reuters' interest in LSEG shares are held through an entity jointly owned by Blackstone's consortium and Thomson Reuters.
Refinitiv is familiar to wealth managers for offerings such as its Eikon range of capabilities which cover cross-asset data and news, analytics and reporting tools. Another of its offerings is Compliance Management, a solution on its Connected Risk platform. Refinitiv has also been producing research about the kind of information that wealth managers use.
Thomson Reuters and Blackstone's consortium have agreed to be subject to a lock-up for their LSEG shares through 29 January 2023, subject to certain exceptions. In each of years three and four, following closing (starting on 30 January 2023 and 30 January 2024, respectively), Thomson Reuters and the consortium will become entitled to sell in aggregate one-third of the LSEG shares issued to them. The lock-up arrangement will terminate on 29 January 2025.
Thomson Reuters said it expects that the LSEG transaction will be predominantly tax-deferred as around $700 million of tax became payable when the deal closed.
“The lock-up arrangements allow Thomson Reuters to sell sufficient LSEG shares necessary to generate net proceeds to meet this tax payment, should it wish to do so. Thomson Reuters does not plan to sell any LSEG shares prior to LSEG's announcement of its full-year 2020 results on 5 March,” it said.
Reuters News' 30-year agreement with Refinitiv will continue following closing and it is scheduled to run to 2048.
Erin Brown, head of finance for Thomson Reuters Corporates segment, has been appointed to join the London Stock Exchange Group board of directors.