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London Stock Exchange to acquire Refinitiv for $27b

The London Stock Exchange (LSE) expects to close its $27 billion purchase of data analytics company Refinitiv in the first-quarter of next year, as the group reported forecast-beating third-quarter income.

The Refinitiv deal will expand LSE’s trading business and make it a major distributor and creator of market data. The transaction was announced last year but ran into regulatory hurdles in Europe as regulators raised concerns about its market share in European bond trading.

LSE this month agreed the sale of Borsa Italiana as part of remedies to appease the European Union’s antitrust authorities.

“We continue to engage constructively with the European Commission and believe the potential divestment of the Borsa Italiana group will contribute significantly to addressing the EU’s competition concerns,” LSE Chief Executive David Schwimmer said.

The LSE said Refinitiv, which is 45 per cent owned by Reuters’ parent Thomson Reuters, is on track to hit $650 million in annual cost savings by the end of the year.

LSE shares, which are up 10 per cent year to date compared to a 23 per cent plunge in the wider bluechip index, edged 0.2 per cent higher to 85.3 pounds by 0715 GMT.

Reporting third-quarter results, LSE said its total income climbed to 600 million pounds for the three months ended September 30, beating an analyst consensus of 592 million pounds. Its post-trade division, which includes clearing house LCH, recorded the strongest growth at five per cent.

Revenue at the company’s capital markets arm, which is the smallest among LSE’s major divisions in terms of contribution to overall revenue, was flat. The exchange said equities trading revenues were lower as a result of reduced market activity.

Market volatility, which in March shot up to levels last seen during the 2008 financial crisis, has come down as investors price in the economic impact of the coronavirus crisis. Financial markets are also awaiting the outcome of the U.S. election and how Brexit will play out.

LSE said it was well positioned for Brexit, with Britain’s transition arrangements with the European Union due to end on Dec.31. The EU has already granted LCH permission to continue clearing derivatives for customers in the bloc for a further 18 months.

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