Thomson Reuters OKs US$27B sale of Refinitiv to London Stock Exchange Group

FILE: Thomson Reuters building (3 Times Square), Manhattan (Photo: Filip Maljković/Flickr, CC BY-SA 2.0)

TORONTO — Thomson Reuters Corp. and its partners confirmed Thursday a US$27-billion deal to sell the Refinitiv financial information business to the London Stock Exchange Group, creating a data giant that the Toronto-headquartered multinational expects to reap future benefits from.

Thomson Reuters will end up with a 15 per cent interest in the London Stock Exchange Group, subject to approvals.

Refinitiv was formerly the largest division of Thomson Reuters, until the information services company sold a 55 per cent stake in it to a group led by the Blackstone Group in October.

“The transaction validates the rationale for our original deal with Blackstone and it represents a logical next step along our path to the full monetization of investment,” said Jim Smith, president and CEO of Thomson Reuters on a call with analysts on Thursday.

“The transaction provides a balance of additional long-term value creation with a greater certainty on the path and timing of future liquidity down the road.”

The announcement is in line with news reports that prompted the Toronto-based company to confirm last weekend that discussions about the sale of Refinitiv were at an advanced stage.

Thomson Reuters said the Refinitiv deal will give it a share of future dividends generated by the London Stock Exchange Group, which it says is positioned for growth in a consolidating financial services industry.

“As an investor, we are comforted by LSE Group’s strong track record of integrating acquisitions, realizing synergies and driving growth and profitability,” Smith said on the analyst call on Thursday. “And with Blackstone remaining a very significant shareholder in the business alongside us, we are even more confident that this transaction will create significant further value going forward.

Upon closing of the transaction, Thomson Reuters is expected to receive up to 82.5 million of LSE Group shares. There will be a two-year lockup on all LSE Group shares it receives, with one-third saleable in years three, four and five after closing, Smith added.

Thomson Reuters also announced that its second-quarter revenue was up nine per cent from the same time last year, mainly due to fees paid to Reuters News since Refinitiv was spun off.

In addition to its remaining stake in the Refinitiv financial data business, Thomson Reuters provides information services for the legal, tax and accounting and news industries.

Second-quarter earnings attributable to common shareholders, including discontinued operations, was US$189 million, or 37 cents per share, down from US$625 million or 88 cents per share.

Thomson Reuters, which reports in U.S. currency, said its diluted earnings from continuing operations more than doubled to 43 cents per share, from 20 cents per share.

Revenue rose to $1.42 billion from $1.31 billion in the second quarter of 2018.