Blackstone led a group of investors to buy a majority stake in the financial and risk unit of
Thomson Reuters last year in a deal that valued the business at some $20 billion, including debt, it reminded many of the heady days of mega-buyouts in the lead-up to the Great Recession.
Less than a year later, Blackstone has made another massive splash by exiting the same company. After weeks of rumors, the
London Stock Exchange has agreed to acquire the financial and risk unit, now named
Refinitiv, in all-share deal valued at some $27 billion. As a result, Refinitiv shareholders will own a 37% stake in the stock exchange, with revenue for the combined business expected to reach $7.3 billion annually.
The deal is expected to close sometime in 2H 2020, though it does face antitrust questions in the US and UK as well as looming concerns over Brexit. Upon completion, it will make Blackstone and Thomson Reuters the stock exchange's largest shareholders.
"This transaction is a defining moment for LSE in terms of its strategic importance. It will create substantial value for our shareholders and important benefits for our customers, employees and other stakeholders," Don Robert, the exchange's chairman, said in a statement.
As part of the deal, the stock exchange will gain majority control of Tradeweb, a provider of bond trading services, and 100% ownership in FXall, which offers a currency trading platform. It will also take on a $13.5 billion bridge loan to cover Refinitiv's massive debt load from Blackstone's initial buyout, which also included investments from the Canada Pension Plan Investment Board and Singapore's sovereign wealth fund GIC. The company's executive team is expected to remain in place, led by Robert and the exchange's CEO David Schwimmer.
The latest deal positions the stock exchange to compete directly with
Bloomberg, arguably the world's most recognizable financial data provider. That will likely please Blackstone CEO Stephen Schwarzman, who once turned down the opportunity to invest in Bloomberg when co-founder Michael Bloomberg was looking to raise money, since Bloomberg wanted a partner who would never sell. Schwarzman later called it an "$8 billion mistake."
Now, a company backed by Blackstone will become one of Bloomberg's chief rivals. And in the process, it managed to complete one of the largest exits in the firm's history, per PitchBook data.
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