Saturday, December 9, 2023

Advisors rack up $ 1.1 billion in fees for LSE-Refinitiv deal

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Bankers, lawyers and other advisers working on the London Stock Exchange Group’s takeover of data provider Refinitiv are expected to earn $ 1.1 billion in fees, one of the biggest paydays for an acquisition in the UK.

Transaction costs have been detailed in an update prospectus released on Wednesday as the LSE’s $ 27 billion purchase nears completion. It comfortably exceeds most comparable offerings, although huge $ 2 billion in fees and taxes linked to Anheuser-Busch InBev’s $ 120 billion buyout of brewer SABMiller in 2016.

The exchange is advised by Goldman Sachs, Morgan Stanley, Robey Warshaw, Barclays and RBC Capital Markets, and attorneys led by Freshfields Bruckhaus Deringer. Evercore, Canson Capital Partners and Jefferies are among the actors of Refinitiv.

The LSE said £ 358million of the costs of the transaction would go to services including financial advice, legal work and accounting. This represents a cost increase of £ 281million reported one year ago. An additional £ 477million will go towards financing costs related to the transaction, which will see the issuance of new shares and debt to pay Refinitiv owners, he added.

LSE buys Refinitiv from a private equity consortium led by Blackstone, the private equity group, which will have a 37% stake in the expanded company once the deal closes. LSE shares have risen 54% since news of the deal broke. The takeover was first agreed in August 2019, but underwent an extended regulatory review.

The deal is a big win for Blackstone. The American private equity group bought a majority stake into Refinitiv for $ 17 billion from Thomson Reuters of Canada in early 2018. Two representatives from Blackstone, Martin Brand and Douglas Steenland, will join LSE’s board of directors under the deal.

LSE and Refinitiv aim to support the growth of automated trading and passive investing in financial markets, both of which require users to purchase large amounts of data.

The deal has grown in importance since it was first announced, as many of their biggest rivals have also rallied around with mega-seals.

S&P Global’s capture of IHS Markit for $ 44 billion and Intercontinental Exchange’s $ 11 billion purchase of mortgage software provider Ellie Mae this year is expected to continue consolidate ownership of the most important assets that underpin the daily global trade between a handful of companies.

The latest obstacle to closing the deal is the approval of competition regulators in Brussels, who postponed until January 21 the decision to examine the LSE’s proposal to sell Borsa Italiana to rival Euronext for 4.3 Billions of Euro’s. This agreement was made to prevent the EU worries that the combined group could exert a stranglehold on European sovereign debt trading. The deal has already been approved in 16 countries, including the United States.


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