Blockbuster’s £ 20 billion acquisition of data company Refinitiv by the London Stock Exchange finally gets the green light
- The European Commission backed the deal yesterday
- The green light was the last major hurdle in a tie first announced in 2019
- It will bring in more than £ 830 million to the advisers and bankers who worked on it
European regulators have finally approved the £ 20 billion takeover of data company Refinitiv by the London Stock Exchange (LSE).
The European Commission backed the deal yesterday, paving the way for the LSE to become a powerhouse in the financial markets.
The green light was the last major hurdle in an agreement originally announced in August 2019 that will bring in more than £ 830 million to the advisers and investment bankers who worked on it.
European regulators finally approve the London Stock Exchange (LSE) blockbuster £ 20 billion acquisition of data company Refinitiv
However, European regulators said their approval was contingent on the sale of the Italian exchange, the Borsa Italiana, by the LSE, continuing to distribute certain clearing services free of barriers, and allowing competitors’ access to LSE data and FTSE indices such as the FTSE 100.
Commission Executive Vice-President Margrethe Vestager said: “Infrastructure competition in trading services and access to financial data products on fair and equal terms is essential for the European economy and in particular for consumers and businesses.”
The deal was approved because “the acquisition will not lead to higher prices or less choice and innovation.”
The merger creates a company that rivals Bloomberg, S&P Global and Intercontinental Exchange in everything from data to clearing and trading. The investors selling Refinitiv, led by US private equity giant Blackstone, will receive a 37 percent stake.
It took the Commission more than a year to conduct the investigation for fear that the merger would make the LSE too dominant in some markets. The LSE’s Borsa Italiana owns the bond trading platform MTS, while Refinitiv owns a similar platform called Tradeweb.
To prove that it was not trying to gain a monopoly, the LSE agreed to sell Borsa Italiana last year. The regulator was also concerned that the combined company would have too much power in clearing – moving money from the buyer to the seller – of complex interest rate derivatives, which are used by investors and companies to hedge interest rate risks.
But the LSE has now agreed that it will not penalize its clearing clients for trading elsewhere. The deal has been signed by competition watchdogs in the US, but is awaiting a thumbs-up in Singapore.