EU clears LSE’s $27 billion takeover of Refinitiv

Brussels:  EU regulators on Wednesday authorised the London Stock Exchange (LSE)’s  $27-billion (22-billion-euro) takeover of US financial data provider Refinitiv with certain conditions.

The transaction is permitted on condition that the parties involved make “commitments that will ensure that the markets will remain open and competitive,” European Union antitrust commissioner Margrethe Vestager said in a statement.

The merger, announced in August 2019, aims to create a market information giant that would rival Bloomberg.

New York-headquartered Refinitiv is one of the main financial markets data providers, with 40,000 institutional clients in almost all countries on the planet.

It was formerly the financial and risk business of Canadian group Thomson Reuters, which went on to share ownership with the majority stakeholder, private equity firm Blackstone.

The deal will see the Thomson Reuter-Blackstone consortium take 37 per cent in the London Stock Exchange Group (LSEG) but hold less than 30 percent of voting rights.

The LSEG forecasts it will triple revenues after the merger and become one of the world’s top players across a range of financial services, including trading in shares and bonds as well as clearing and data.

US authorities have already approved the merger. EU regulators launched their in-depth investigation of the deal in June last year.

To win EU regulatory approval, the LSEG agreed to divest itself of Borsa Italiana, the Italian stock exchange in Milan, and for 10 years to continue offering over-the-counter interest rate derivative clearing services on an “open access basis” and supply London Stock Exchange trading data to competitors, the statement said.

“The Commission therefore concluded that the transaction, as modified by the commitments, would no longer raise competition concerns. This decision is conditional on full compliance with the commitments,” it said.

The LSEG said in its own statement it “confirms that the European Commission has conditionally approved, under the EU Merger Regulation, its proposed all share acquisition of Refinitiv”.

It added that the merger “remains subject to a small number of merger control and financial regulatory authority approvals” and expected the transaction to be completed before the end of March. LSEG shares jumped on the news and were trading 1.7 percent higher in mid-afternoon on the London Stock Exchange.

Euronext, Europe’s biggest stock exchange, acknowledged the EU’s decision. In October it entered a binding agreement to take Borsa Italiana off Refinitiv’s hands for 4.3 billion euros ($5.2 billion).

Meanwhile, central European currencies were little changed on Wednesday, ahead of the Polish central bank’s monetary policy meeting outcome, where analysts expect it to keep rates on hold, although some see a chance for another rate cut this year. The zloty was little changed, edging up 0.1% to 4.5245 per euro. “Until the decision is published, volatility in the domestic market should remain limited,” Bank Millenium wrote in a note.

“The message may be the source of volatility, as long as the Council emphasizes even stronger determination to maintain the weak zloty,” they added. Of 21 analysts polled by Reuters, 19 expected the main interest rate to remain stable at 0.1%. However, some analysts think that the rate could be cut this year as December inflation came in lower than expected and central bank governor Adam Glapinski said that a rate cut could be possible in the first quarter if there is a third wave of the pandemic.

Elsewhere, the Hungarian forint edged down 0.07% to 359.30. “Trade is quiet, investors are waiting for the Polish rate decision,” a Budapest-based trader said. “If rates remain unchanged, then the forint and the zloty could firm.” Fresh economic data from the Czech Republic and Romania underlined the effects of the second wave of the pandemic on the region. Czech headline inflation eased to a two-year low in December, putting the year-on-year rate at 2.3%.

Retail sales excluding cars and motorcycles fell by 7.0% year-on-year in November. The Czech finance ministry will hold its first bond auctions of the year later in the day. Romania’s adjusted industrial output fell 0.6% month-on- month in November, and was up 0.4% from a year ago. The Czech crown slid 0.14% to trade at 26.200 per euro, while the Romanian leu was little moved.

Budapest’s stocks were up 1.58% as Pharmaceutical company Richter jumped 7.5% by 1019 GMT, after media reports that its U.S. partner AbbVie said in a presentation it saw peak sales of Vraylar, a key antipsychotic drug, at $4 billion with currently approved indications. Warsaw’s equities were down 0.89%.