Bloomberg Face-Off Awaits London Stock Exchange Following Refinitiv Deal Close
03 Febrero 2021 - 06:40AM
Noticias Dow Jones
By Ben Dummett
Now that the London Stock Exchange Group PLC has completed its
$15 billion acquisition of financial data company Refinitiv
Holdings Ltd., the next big test is proving it can reclaim at least
some of the ground it has lost to industry heavyweight Bloomberg
LP.
Refinitiv competes against Bloomberg selling an array of
financial-data to the finance industry. Yet, Refinitiv's share of
the market against its rival has been declining for years. That
underscores the LSE's challenge, particularly given that some users
say Bloomberg's ubiquitous data terminal that is found on
institutional trading desks around the world is more expensive than
the equivalent from Refinitiv.
The company's slice of the global market data pie as measured by
revenue fell from a market-leading 32% in 2010 to 21% in 2019,
according to data from Burton-Taylor, the research and advisory arm
of London-based brokerage TP ICAP. Over the same period,
Bloomberg's share climbed from 29% to 33%.
Bloomberg and Refinitiv compete with Dow Jones & Co., the
parent company of The Wall Street Journal.
Refinitiv distributes data through several channels, including
its Eikon computer terminal -- which is now called Refinitiv
Workspace. But the terminal business is among its slowest growing,
as technology replaces humans in securities trading. Indeed, the
number of professional terminals taking real-time pricing data from
LSE exchanges fell 19% between 2019 from 2015.
Still, Refinitiv's terminal business remains a significant
operation, generating about 40% of its total revenue, estimates UBS
Investment Bank. Refinitiv reported total revenue of $4.8 billion
for the nine months ended Sept. 30. The LSE declined to breakout
revenue for Refinitiv's different data distribution operations.
The terminal business faces "the greatest amount of headwinds,"
said UBS analyst Michael Werner. "Ultimately, LSE is essentially
going to have to manufacture a turnaround there to make this deal
successful."
While analysts have praised the terminal content provided by
Refinitiv, the LSE needs to help make it easier for users to work
with that information, they said.
As an example, for equity investors, the product's market data,
research tools and content are very competitive, said Dan Connell,
head of market structure and technology at Greenwich Associates.
But Refinitiv will be counting on the LSE's additional funding and
expertise to bolster the product's technology to help expand the
terminal business, Mr. Connell said.
For LSE Chief Executive David Schwimmer, the newer Refinitiv
Workspace product is already an improvement on the Eikon in terms
of flexibility and ease of use. LSE also plans further investment
in areas such as environmental, social and corporate-governance
analytics, and fixed-income data, he said Friday. Bloomberg
declined to comment.
Integrating Refinitiv's operations will likely be made easier by
the strength of some of its faster-growing businesses. That
includes Refinitiv's data feeds that supply pricing and other
information real-time directly into the systems of banks and other
large institutions to help these customers manage their balance
sheets and minimize risk. Meanwhile, the LSE has already benefited
from the data provider's electronic foreign-exchange and
fixed-income trading platforms FXall and Tradeweb Markets Inc.
The stock of Refintiv's majority-owned Tradeweb is up 37% in New
York since the LSE-Refinitiv deal was first announced as the
marketplace generated record average daily trading volumes last
year of $838 billion.
Tradeweb's stock-price gain effectively cut LSE's price for the
rest of Refinitiv by about GBP1.26 billion, equivalent to $1.73
billion, Berenberg Capital Markets said in January.
Investors support the deal. LSE's London-listed stock is up 66%
since news of the merger talks -- easily outstripping the overall
market.
LSE's Refinitiv wager comes as the rise of passive investing and
computerized trading spurs demand for market intelligence that can
be packaged and sold. That opportunity is driving providers to
consolidate to broaden their offerings. In November, S&P Global
Inc. struck a $44 billion deal for IHS Markit Ltd.
The deal marries LSE's equity trading venues, clearing and
settling over-the-counter derivatives, and its index licensing
business with Refinitiv's array of financial data, analytical and
compliance products, along with its foreign-exchange and
fixed-income trading venues.
The LSE forecasts the Refinitiv deal will help it generate
annual revenue growth of 5% to 7%, fueled in part by cross-selling
each other's products. Still the growth rates of Refinitiv and LSE
recently fell short of those targets and regulatory curbs could
challenge this target.
Based on the latest financial results, LSE and Refinitiv each
grew year-over-year revenue by 2% in the third quarter last year.
Meanwhile, the European Commission last month ruled that the
combined group can't play favorites in distributing its data among
vendors as a condition of approving the deal.
Mr. Schwimmer is undeterred as the LSE already operates an
open-access approach. "We are committed to it and we think it is
very customer friendly."
Write to Ben Dummett at ben.dummett@wsj.com
(END) Dow Jones Newswires
February 03, 2021 07:25 ET (12:25 GMT)
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