Bankers, lawyers and other advisers working on London Stock Exchange Group’s takeover of data provider Refinitiv are set to earn $1.1bn in fees, one of the biggest paydays for a UK acquisition.
The transaction costs were detailed in an updated prospectus released on Wednesday as the LSE’s $27bn purchase nears completion. It comfortably exceeds most comparable deals, though trails the enormous $2bn in fees and taxes linked to Anheuser-Busch InBev’s $120bn takeover of brewer SABMiller in 2016.
The exchange is being advised by Goldman Sachs, Morgan Stanley, Robey Warshaw, Barclays and RBC Capital Markets, and lawyers led by Freshfields Bruckhaus Deringer. Evercore, Canson Capital Partners and Jefferies are among those acting for Refinitiv.
The LSE said that £358m of the deal costs would be for services including financial advisory, legal work and accounting. This is up from £281m in costs that the LSE reported a year ago. A further £477m will go to financing costs related to the deal, which will see the issuance of new shares and debt to pay Refinitiv’s owners, it added.
The LSE is buying Refinitiv from a private equity consortium led by Blackstone, the private equity group, which will hold a 37 per cent stake in the enlarged company once the deal is completed. Shares in the LSE have risen by 54 per cent since news of the deal broke. The takeover was first agreed in August 2019 but has faced a drawn-out regulatory review.
The deal is a big win for Blackstone. The US private equity group bought a majority stake in Refinitiv for $17bn from Canada’s Thomson Reuters in early 2018. Two Blackstone representatives, Martin Brand and Douglas Steenland, will join the LSE board as part of the deal.
The LSE and Refinitiv are aiming to ride the growth of automated trading and passive investing on capital markets, both of which require users to purchase vast amounts of data.
The deal has assumed greater significance since it was first announced as many of their biggest rivals have also stepped up with megadeals.
S&P Global’s capture of IHS Markit for $44bn and Intercontinental Exchange’s $11bn purchase of mortgage software provider Ellie Mae this year are set to further consolidate ownership of the biggest assets that underpin global daily trading among a handful of companies.
The final hurdle to the deal’s completion is approval from competition regulators in Brussels, who have delayed a decision until January 21 to examine the LSE’s proposal to sell Borsa Italiana to rival Euronext for €4.3bn. That deal was undertaken to pre-empt EU concerns that the combined group could exert a stranglehold on European sovereign debt trading. The deal has already received clearance in 16 countries including the US.