The London Stock Exchange (LSE) has agreed a £450 million cash deal to buy the 50% stake in FTSE International it does not already own from publisher Pearson.Expected to close in the first quarter of next year, the deal gives the LSE full strategic control of the index business it created in 1995 with the Financial Times Group.
The exchange operator says the move "significantly diversifies" its business into indices, data and analytics and, in particular, creates new growth opportunities in listed derivatives trading.
For the financial year end at 31 December 2010, FTSE recorded revenue of £98.5 million, Ebitda of £40 million and net income of £9.4 million. Its acquisition should bring cost synergies of £10 million a year and gross revenue synergies of £18 million per annum by the end of year three.
The LSE says it intends to invest in accelerating growth in FTSE's tradable index business, in expanding its product range and cross-selling to the customers of both businesses.
Xavier Rolet, CEO, LSE Group, says: "This is a business we know well, and we expect that going forward our customers will benefit from greater choice, opportunity and innovation. Immediately earnings enhancing, we expect this transaction to create long-term value and growth for our customers and shareholders"
The agreement builds on Pearson's sale of its 61% stake in Interactive Data last year for $2 billion as it moves out of the financial data business.
Marjorie Scardino, CEO, Pearson, says: "Proud as we are of that long association, FTSE's strategy is different from our own. We wish it every success as we continue to build our digital business information services around the Financial Times."
The LSE is funding the deal through surplus cash and bank facilities but has also secured commitments to new facilities of £350 million from banks to "ensure we maintain a prudent capital position and appropriate financial flexibility".
"We risk becoming the best informed society that has ever died of ignorance"
- Rubén Blades
"You can't make up anything anymore. The world itself is a satire. All you're doing is recording it"
- Art Buchwald
"It's getting exciting now, two and one-half. Think of everything we've accomplished, man. Out these windows, we will view the collapse of financial history. One step closer to economic equilibrium"
- Tyler Durden
"It is your corrupt we claim. It is your evil that will be sought by us. With every breath, we shall hunt them down."
- Boondock Saints