LSEG yet to complete valuation exercise as to Refinitiv deal
London Stock Exchange Group plc (LSEG) today posted its annual report for 2020, with the document including an update on the acquisition of Refinitiv.
On January 29, 2021, the Group completed the acquisition of Refinitiv Parent Limited, a company incorporated in the Cayman Islands and headquartered in London and New York.
Refinitiv Parent holds an approximate 52% economic interest in Tradeweb Markets Inc. and its subsidiaries. Tradeweb is a Delaware company and the holding company of Tradeweb Markets LLC, which offers electronic marketplaces for trading fixed income, derivatives, money market and equity products. Tradeweb operates as a standalone, publicly listed entity.
Under the terms of the Stock Purchase Agreement, LSEG plc (directly and through certain wholly owned subsidiaries) acquired the entire issued share capital of Refinitiv Parent and, in exchange, LSEG plc issued 204,225,968 shares (comprising 136,870,442 listed LSEG ordinary shares; and 67,355,526 unlisted LSEG limited-voting ordinary shares). The limited-voting ordinary shares rank pari passu with the LSEG ordinary shares.
Based on LSEG plc’s issued share capital as at completion, the total shares amounted to an economic interest in LSEG plc of approximately 37%; and less than 30% of the total voting rights in LSEG plc.
Of the total number of shares issued, 179,610,123 shares were issued on 29 January 2021 and the remaining 24,615,845 shares were issued on 1 March 2021. Assuming an equivalent value for each listed LSEG ordinary share and each unlisted LSEG limited-voting ordinary share, upon issue, the total value of the shares was £17.5 billion.
Upon completion, the Group refinanced Refinitiv third-party debt by drawing down $9.936 billion and €3.629 billion under the Bridge Facility, term loan, and the new and amended multi-currency revolving credit facilities.
LSEG is currently completing the steps in applying the acquisition method in terms of IFRS 3 Business Combinations, to determine what is part of the business combination transaction, to recognise and measure the identified net assets acquired and non-controlling interests; and to determine the consideration transferred.
However, given the size of the transaction and the short period of time between the completion and the date when the Annual Report is authorised for issue, the Group is unable to reasonably estimate and determine the:
- fair value of the consideration transferred;
- fair value of the net assets acquired;
- non-controlling interests in Refinitiv; and
- resulting goodwill.
As part of the fair value exercise the Group will consider the recognition criteria in terms of IFRS 3 and may identify the following classes of purchased intangible assets:
- Customer contracts and relationships;
- Technology – acquired software;
- Technology – internally developed;
- Databases and content;
- Licences; and
- Trade names.
LSEG has 12 months from the date of acquisition to complete the valuation exercise.