A little more than two years after London Stock Exchange Group (LSEG) acquired Refinitiv with an all-share transaction, it continues to buy back own shares that were used as payment to previous Refinitiv owners Thomson Reuters and Blackstone.
LSEG acquired Refinitiv for $27 billion in shares in January 2021, despite reservations from some investors about the price and whether the two companies were a good fit for each other. Refinitiv was formed in 2018 after Thomson Reuters Corp sold a 55-percent stake in its Financial & Risk unit to equity firm Blackstone Group, emerging as a serious competitor to Bloomberg as a provider of trading data and analytics.
Concerns have largely quieted, following LSEG’s announcement that the integration of Refinitiv has greatly enhanced its ability to generate cash – cash which it now intends to put towards a buyback of £750 million worth of shares by April 2024. The buyback will be directed towards the Blackstone and Thomson Reuters consortium’s stakes from the 2021 Refinitiv acquisition, which amounts to 37 percent. The consortium is willing to let go of 10 percent of its LSEG equity.
This newly announced buyback comes on the heels of a similar one, also worth £750 million, that was put into place in 2022. £450 million of the older buyback remains to be completed by July this year.
The acquisition of Refinitiv has proven to be transformative for LSEG, growing its data and analytics business by 4.2 percent to £4.9 billion in 2022, making up 66 percent of the company’s £7.4 billion revenue. Comparatively, traditional activities, such as the capital market and post trade businesses contributed £1.5 billion and £991 million respectively.
LSEG ended 2022 with £68 million in recurring revenue synergies, well above the expectation of £40 to £60 million. In response, the company has raised its guidance on revenue synergies to between £350 and £400 million by 2025, up from £225 million.
Refinitiv isn’t the only headway LSEG has made into data and analytics. The company also announced a $2 billion partnership with Microsoft in December last year with the end goal of putting its data platform on Microsoft Cloud and embedding its data and analytics into Microsoft’s products, such as Teams, Excel and Powerpoint.