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London Stock Exchange’s groundbreaking deal

Shares in the London Stock Exchange Group shot up by about 15 per cent in early trading on the news that it was in negotiations to buy financial data provider Refinitiv for $27bn in an all-share deal. The LSE is obviously keen to move forward after the failure of its bid for Deutsche Borse just over 18 months ago. Coincidentally, Refinitiv came into being at roughly this time when it was spun out of Thomson Reuters. Anyway, this is important because, for the LSE, it signals a sizeable potential shift into the provision of data and analytics. Given the size of the deal, it is likely to come under close scrutiny from the regulators.

The other thing is that LSE’s investors will have to be convinced that taking on $12bn of Refinitiv’s debt is the right thing to do for the future. The winners of all this, should it go through, will be the investor consortium led by Blackstone who put $4bn into buying the Thomson Reuters’ financial and risk division, which was subsequently rebranded Refinitiv.

If this deal goes ahead, the stake will be worth $8bn – not a bad return for less than two years!

A nightmare for Sports Direct

The second thing I wanted to mention today was the nightmare of Sports Direct who released twice-postponed results on Friday night with not much to show for it. The share price fell sharply but then recovered some of the loss after it announced the departure of its CFO and that it would be revising full year guidance due to the poor performance of House of Fraser. The delay was apparently due to a massive tax bill that came in from Belgium at the last minute. After having a rant at everyone and bigging up his future son-in-law as the future of the business, you do wonder whether he’d be better off taking his company private given that he doesn’t seem to be a fan of answering to shareholders. However, if his assets continue to deteriorate in value his ability to stage some kind of buyout will continue to diminish and further outbursts may make potential investors nervous about jumping on board with him.

I think that Ashley needs to address the businesses he’s already got – especially Sports Direct – because he is spreading himself too thinly in my opinion. Thank God he didn’t manage to buy Debenhams – surely that would have made these results even worse!

Other than that, in my Watson’s Daily online blog that you can find on watsonsdaily.com, I talk about the buoyant UK jobs market, mergers for Just Eat and for Pfizer, rent cuts for Primark and Sainsbury’s in restaurants.

Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Peter Watson

Peter Watson

Peter Watson founded Seiha Consulting, a career transition consultancy, after working in HR and four recruitment agencies. He was also a stockbroker for 13 years in London and Tokyo, advising some of the world’s biggest financial institutions on European and Japanese stock market investment. He started writing the Daily (previously known as “Watson’s WIFI”) to help candidates prepare for interviews – but soon found that many others wanted to read it as well!

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