Blackstone to Sell Refinitiv to London Stock Exchange Group Only 10 months After Purchase

1. The London Stock Exchange Group plc will pay $27 billion to The Blackstone Group Inc. for the deal, which is expected to be finalized by mid-2020 will.
2. Refinitiv’s acquisition comes after a change in management for the London-based company, which announced its intent to focuse on data and technology as revenue drivers.

The Blackstone Group Inc., one of the largest private equity firms in the world, is reportedly in talks with the London Stock Exchange Group plc. (LSE) for the sale of Refinitiv; a financial data analytics provider, considered the second largest in the industry after Bloomberg.

Blackstone purchased Refinitiv from the Thompson Reuters Group back in October 2018 for approximately $20 billion; 13.5 billion in debt and the rest in equity. The reported agreement states that LSE would buy Refinitiv from Blackstone for $27 billion, including debt. In this sense, the value of the equity doubled; $6.5 billion at the time of the purchase from Thompson Reuters compared to $13.5 billion today, as the $13.5 billion debt remained the same. Under the terms of the deal, Blackstone will be paid in shares, which it will be unable to sell for five years.

Global exchanges such as the LSE are focusing more and more on data and technology as revenue drivers, and less on the actual matching of buys and sells, thus making the purchase of companies such as Refinitiv highly desirable. Also, the purchase aligns perfectly with LSE’s CEO David Schwimmer’s vision of positioning LSE as the leading company in the European market, especially after rumors that its main competitor on this side of the Atlantic, Deutsche Boerse, had shown an initial interest in purchasing Refinitiv from Blackstone.

While acquiring and selling companies for a profit is the bread and butter of companies such as Blackstone, the reported deal is remarkable both in its timing as well as its terms. Companies like Blackstone usually hold on to their investments for an average of five years before selling, but in this case Blackstone sole Refinitiv only ten months after they purchased it from Thompson Reuters. Moreover, the fact that Blackstone could double the value of the equity in such a short period of time is highly exceptional and raises many questions amongst financial experts. This is especially true as no added value in technology or new business was added to Refinitiv.

Indeed, abrupt and seemingly inexplicable increments in companies’ value in a very short period of time is a major trend in international financial markets. Just recently, Maso Capital, a Hong Kong-based hedge fund, has made headlines when it sued Chinese tech giant Qihoo 360 in the Cayman Islands. Qihoo 360 went through a process of privatization in NYSE and relisting in SSE, increasing its valuation by 550% and without any known assets added to Qihoo before the relisting on the SSE. According to Maso, this was made possible through undervaluing the share price at the time of privatization and forcing minority shareholders to take the lowball offering in a vote. In less than two years, Qihoo went from a value of $9.3 billion to $63 billion.

Maso Capital’s case against Qihoo 360 continues in the Cayman Islands.

Update: The Cayman Islands lawsuit between Maso Capital and Qihoo 360 is set to continue, with hearings scheduled for 2020. The two parties are reportedly considering mediation in order to reach a settlement outside of the court and avoid further reputational damage.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes.