London Stock Exchange on Track to Complete Refinitiv Deal

(Bloomberg) --

London Stock Exchange Group Plc said it’s on track to finalize its $27 billion acquisition of data provider Refinitiv in the second half of the year, despite speculation the deal is facing regulatory delays.

LSE Chief Executive Officer David Schwimmer said Friday that “detailed integration planning is underway.” The exchange also reported a full-year operating profit of 1.07 billion pounds ($1.37 billion), which met analyst estimates.

The London bourse agreed to buy Refinitiv last year to expand its data services and form a global trading powerhouse in fixed-income, currencies, stocks and derivatives. The combined LSE-Refinitiv will generate about 70% of revenue from data, up from LSE’s current 40%, according to Bloomberg Intelligence.

The tie-up is facing deeper-than-expected early scrutiny by regulators in Brussels, the Financial Times reported earlier this week. Formal notification of the deal, planned for this month, has been postponed as regulators take a closer look in the so-called pre-notification phase, according to the report.

“These are processes where regulators look to understand as much as possible about the businesses involved,” Schwimmer said in an interview with Bloomberg News. “Refinitiv being a privately held company and not as transparent within Thomson Reuters, there’s a lot for the regulator to learn and understand about it.”

Schwimmer said earlier on a call with reporters there was nothing unusual about the length of time the regulatory process was taking, and that he was intending to file for formal approval with the European Commission in March. He refused to be drawn on details, saying he was holding constructive discussions with regulators.

LSE’s shares were trading 1.1% lower at 12:33 p.m. in London, outperforming a declining FTSE 100 index.

Transformative Deal

Schwimmer added that it was “premature” to discuss any disposals that may be required by regulators, and didn’t expect Borsa Italiana’s important position within the group to change.

The Refinitiv deal is LSE’s largest acquisition to date. Shareholders voted in November to approve the tie-up, which will almost treble LSE’s revenue and give it access to 40,000 institutional clients in 190 countries.

Other highlights from the earnings:

  • LSE has some travel restrictions in place in line with advice from health authorities stemming from the coronavirus outbreak, executives said on a media call, declining to say which countries were affected. Some staff are able to work from home.
  • Schwimmer told Bloomberg News that the market volatility stemming from the virus “isn’t supportive of new listings” but other parts of LSE’s business like stock trading are better positioned to benefit.
  • LSE plans to give an update in March on its proposal to shorten trading hours. Schwimmer said he would prefer to coordinate with European exchanges. “Given the wellbeing of people in the marketplace triggered the issue, it would be most constructive if there was an agreed approach,” he said.
  • Schwimmer said he was confident that LSE’s swaps clearinghouse LCH would either be granted full or temporary access to the European Union as a crucial market services provider. This would be true even if there is no deal between the U.K. and EU on financial services, he said.

©2020 Bloomberg L.P.

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