The London Stock Exchange is in great dynamic ferment from a business point of view.
Evidently the S&P500 model, which produces one of the most important indices in the world, but then goes beyond that as a rating agency and much more, is setting the standard.
In fact, close negotiations are underway for a merger with Refinitiv.
The hypothesis is that if it is realized it will give birth to a real giant in the field of stock exchange exchanges and data flow.
As usual, the London Financial Times was the first to talk about it.
According to sources in the British newspaper, the deal is now imminent, a matter of a week or so…
Also the Milan Stock Exchange involved
The London Stock Exchange also controls Piazza Affari and has a market capitalisation of £19.3 billion.
Moreover, the balance sheet is weighed down by around £1 billion in debt.
What is Refinitiv? Basically it is a branch of the Thompson Reuters group and is valued at about 20 billion dollars.
As is well known, the core business is the flow of financial data together with advanced risk management systems.
Such a merger of the London Stock Exchange for our index would not, however, generate any particular novelty.
Under the control of Blackstone
Since 2018 Refinitiv has been under the control of the Blackstone Fund.
This has in fact captained a roped party (with the Canadian pension fund and the Singapore sovereign fund) has taken over 55% of Refinitiv.
The remaining shares are still in the hands of Reuter, the well-known information agency.
Blackstone therefore aims to create a world pole and the LSE would acquire the role of market leader in data and analysis.
It is thought that it is no coincidence that such a negotiation takes place at a time of maximum uncertainty regarding the future of the city of London as a leading financial center, due to the indefinite Brexit.
The figures speak of a valuation that will be around 27 billion dollars.
The hypothesis is of an architecture that will see a first issue of shares by the London Stock Exchange that will allow the shareholders of Refinitiv to have 37% of its capital.
Although then to complete the various steps Thomson Reuters would find itself shareholder of the LSE only 15%.
Completed the operation the group of the London Stock Exchange and Milan, will keep the Qatar fund as the first shareholder followed by BlackRock.
In essence, after the lack of agreement with the Frankfurt Stock Exchange, it has been preferred to move on connected and not parallel business agreements.
Probably in time a winning choice.