London Stock Exchange Group (LNSTY) shares hit a fresh record high Monday after confirming its in talks with private equity group Blackstone Group (BX) over the potential sale of analytics firm Refinitiv that would boost the exchange operator's global reach in fixed income and data markets.
Under terms of the deal, which are still be negotiated, the LSE Group would acquire Refinitiv for around $27 billion, including debt, while bringing in Blackstone, Thomson Reuters Corp. (TRI) and the Canada Pension Plan Investment Board as LSE Group investors with a combined 30% stake. News and information group Reuters holds a 45% stake in Refinitiv, while Blackstone and a consortium of investors own a majority piece that was valued at $20 billion last year.
"The digital transformation of the financial markets infrastructure landscape, together with the increased potential for innovation, is driving customer demand for sophisticated data content and analytics provided on flexible and open platforms," the LSE Group said in a statement.
"Against this backdrop, the Board has conviction that a leading financial markets infrastructure provider must operate globally and across asset classes, with data management, analytics and distribution capabilities that can serve customers across asset classes and geographies."
LSE Group shares were marked 14.85% higher in London following confirmation of the deal talks, which were first reported over the weekend, and changing hands at a record high of 6,516 pence each, a move that values the company at just under £20 billion ($24.66 billion).
Thomson Reuters shares were marked 1.12% higher in pre-market trading, meanwhile, to indicate an opening bell price of $71.20 each, a move that extends the stock's year-to-date gain to around 47.4%.
Refinitiv, which majority-owns the fixed income trading venue Tradeweb as well as the foreign exchange trading platform FXAll, is best known for its data analytics business, a leading provider of real-time pricing, reference data, private and public company information and events.
"Together LSEG and Refinitiv would be the largest listed global financial markets infrastructure provider by revenue, with combined annual revenues of over £6 billion in 2018 and would be well positioned to deliver attractive top line growth over the medium-term," the company said.
"In addition, LSEG believes that annual run-rate cost synergies in excess of £350 million would be deliverable in the five years after completion and that the transaction would deliver strong adjusted earnings per share accretion in the first full year after completion."