London exchange’s parent company has secured regulatory approval from a US government panel for its proposed $27 billion million acquisition of financial data provider Refinitiv. The Committee on Foreign Investment in the United States (CFIUS) said Monday the takeover doesn’t raise any national security concerns, which clears yet another hurdle for the all-stock deal to buy the former financial and risk business of Thomson Reuters, which was revealed in August.
The UK’s FCA regulator gave the purchase offer’s circular its backing in November, and LSEG’s shareholders also have overwhelmingly voted in favor of the institution’s planned buyout that will put them in competition with giants like Bloomberg.
The London Stock Exchange said in its statement that it expects the deal to close in the second half of 2020. However, the bourse operator still needs to secure more approvals and antitrust clearances as regulators are likely to scrutinize the transaction and its potential impact on market data costs.
European competition authorities, which had previously proved to be an obstacle for cross-border alliances, are expected to vote on LSEG’s move to acquire Refinitiv “around the summer,” LSE said in January.
Back in 2017, antitrust regulators blocked London Stock Exchange’s £21 billion merger with Deutsche Boerse, citing monopoly concerns from combining Europe’s two largest stock exchange operators.
Refinitiv to become biggest shareholder in LSE
Under the terms of the deal, the Blackstone-led Refinitiv will own 37 percent of the combined group, while its former owner, Thomson Reuters, will be holding a 15 percent stake. It would become the biggest shareholder in the London exchange, with the right to name three directors.
LSE said there is a lot of overlap with Refinitiv in areas including technology, property, and corporate functions, which allows for combining the data generated by the exchange with Refinitiv’s distribution and analytics.
The proposed takeover also helped strengthen Thomson Reuters’ profit metrics due to the positive revaluation of warrants that the company holds in Refinitiv after LSEG’s offer.
Refinitiv, whose Eikon terminals challenge those provided by Bloomberg, went private in October 2018 when Reuters covmpleted the sale of its majority stake to a consortium led by private equity firm Blackstone Group for $20 billion. Thomson Reuters kept a 45 percent stake in the business.