Transactions or data: Can LSEG have their cake and eat it?

By Laura Morrison, Junior Account Executive

The Greek philosopher Heraclitus famously said, “There is nothing permanent except change” and with a history which can be traced back to the 17th century, it is fair to say that the London Stock Exchange Group (LSEG) has fully embraced this.  However, is its latest venture a step too far?  I am of course talking about its $27bilion acquisition of Refinitiv, one of the world’s largest providers of financial market data and infrastructure.  A move which will transform the 300-year-old exchange into a financial market giant overnight.

Since the deal was approved in February, shares in LSEG have fallen by a third based on worries that the cost savings and synergies expected might not materialise as quickly as expected. There is also concern that the newly expanded group will have difficulty in positioning itself; will the focus be that of financial market infrastructure business or that of a global provider of data and analytics?

Those voicing these concerns are perhaps missing one important point: it is no longer a binary choice. Without a world class data option LSEG’s traditional business was at risk of decline or worse, takeover.  Attracting new business, be it from existing clients or from harnessing cross selling opportunities, is key to delivering the financial returns the group has predicted. However, communicating a clear message to existing and prospective customers will require careful consideration and a more complex approach than just a “one stop shop”.

The LSEG core business now benefits from global scale and geographic diversification and with world class data and collection, management and distribution it should find it considerably easier to attract new business to its trading platform. Likewise, Refinitiv has the benefit of a world class reference customer in LSEG and can now provide a full end to end solution to its customer base.

We all know the word ‘synergy’ appears in almost every acquisition document yet only the etymologists among us are likely to know that the meaning of the word itself has changed over time from its literal translation of ‘working together’ (from the Greek: ‘sunergos’) to today’s understanding that the value and performance of two companies combined will be greater than the sum of the separate individual parts.

Synergy is what this acquisition is built upon and communicating the positive aspects of the newly expanded business using the sales channels within LSEG and Refinitiv should deliver the rewards projected.

No one should underestimate the challenges ahead, however, failing to provide the level of data offered by Refinitiv and thus failing to change could have impacted LSEG’s permanency.  Perhaps Heraclitus had a point.

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