The chief executive of the London Stock Exchange Group (LSEG) has said it could take up to five years for the exchange to fully integrate and realise synergies from its £27 billion acquisition of Refinitiv.
Speaking during a keynote interview at the International Swaps and Derivatives Association (ISDA) Europe conference in London, LSEG group CEO David Schwimmer, described the deal as ‘transformational’ for the stock exchange, but acknowledged it could take years to complete the integration.
“We have to close the transaction and we do have a timeframe in terms of delivering synergies both on the cost and revenue side,” said Schwimmer. “It could take up to five years, but we expect to get most of those synergies within the first three years of closing the deal. There are some elements, though, that could take longer when you’re doing things like consolidating data centres, which can take sometimes take much longer.”
LSEG and Refinitiv confirmed and agreed to the £27 billion acquisition in August this year. Both parties said that upon completion, Refinitiv shareholders Blackstone and Thomson Reuters will hold a 37% interest in LSEG and just under 30% of its total voting rights. The transaction is expected to close in the second half of 2020, dependent on shareholder, competition and regulatory approvals being obtained.
Schwimmer added during the keynote interview that the deal had been driven by continuing changes across the industry, including the increasing importance of data and analytics, and the shift towards electronic and multi-asset trading. Refinitiv will also offer LSEG a route into FX markets for the first time, and broaden the exchange’s global footprint in terms of coverage in emerging and growth markets.
“[The transaction] positions LSEG very to take advantage of growth in these areas, particularly with respect to exposure to other asset classes. On that, we have a strong position in equities and an increasingly important role in fixed income, but with the Refinitiv combination, it positions us more strongly in fixed income and puts us in a new asset class, foreign exchange. It’s worth pointing out that fixed income an FX are the two largest traded asset classes,” Schwimmer added.
“Not only does [Refinitiv] have the content, but the distribution and data management capabilities on global basis, which is truly transformational for us… As we think about how we want to position the company in years to come, we recognise that we have to be truly global. Refinitiv are in countries all over the world, they have a substantial presence in the US, China, and they are in dozens and dozens of emerging markets, so that geographic expansion is another important element that [the transaction] gives us.”