By Huw Jones
LONDON (Reuters) - London Stock Exchange Group (LON:LSEG) announced plans to buy back more of its shares on Thursday as it raised its income growth outlook and highlighted its successful integration of Refinitiv, saying this had supercharged its ability to generate cash.
LSEG said it would seek shareholder consent to buy more of its own stock from a consortium of Blackstone (NYSE:BX) and Thomson Reuters from which it acquired data analytics group Refinitiv for $27 billion in January 2021.
"In addition to our existing share buyback, we are today announcing plans to seek shareholder approval for a buyback directed towards the Blackstone/Thomson Reuters consortium's stake, which will benefit all shareholders," LSEG Chief Executive David Schwimmer said in a statement.
The Refinitiv deal transformed LSEG, with data and analytics accounting for 4.944 billion pounds ($5.9 billion) of its total income of 7.743 billion pounds in 2022, eclipsing the sums earned by its traditional exchange activities, including share trading, which go back more than 300 years.
"We are accelerating delivery of our cost synergies and increasing our revenue synergy targets," Schwimmer said.
The directed buyback is expected to be up to 750 million pounds by April 2024, LSEG said.
Thomson Reuters, the parent company of Reuters News, and Blackstone did not immediately respond to requests for comment.
Schwimmer said the consortium owned just over 30% of LSEG shares when the Refinitiv deal was completed. Thomson Reuters, owned about $5.6 billion worth of LSEG shares as of Jan 31.
About 10% of LSEG equity is available for sale by the consortium.
LSEG said 300 million pounds of a separate, broader 750 million pound share buyback was carried out in 2022, with the remainder to be completed by July 2023.
"We see the result as strong enough to keep sentiment for LSEG intact ahead of any potential share disposals over the coming months," RBC Europe said in a note to clients.
Shares in LSEG, which released preliminary 2022 results in-line with forecasts, traded 2.6% lower.
TARGETS
LSEG's total income, including recoveries, of 7.743 billion pounds in 2022, was just above analysts' consensus of 7.733 billion pounds, and up from 6.535 billion in 2021.
It raised its guidance on revenue synergies from 225 million pounds by 2025 to 350-400 million pounds.
Chief Financial Officer Anna Manz said targets linked to the Refinitiv takeover would expire in December and she would share her 'thinking' later this year on what comes next.
"Right now we are very focused on making sure we absolutely knock those acquisition targets out of the park," Manz said.
Schwimmer said the integration of Refinitiv and a strategic $2 billion partnership announced with Microsoft (NASDAQ:MSFT) in December meant LSEG is "shifting from integration to transformation".
"We generate a lot of cash," he told reporters.
Britain is seeking to persuade Softbank-owned UK chip technology company Arm to have a listing in London. The UK has also launched a raft of capital market reforms aimed at helping to close the listings gap with New York.
Schwimmer declined to comment on whether he expected Arm to have a London listing.
"We continue to be very excited about the prospects for this market, it continues the most international capital market and there is a real opportunity to continue to improve it," Schwimmer said.
He was also optimistic that LSEG's clearing arm in London will not be cut off from the European Union when existing EU market access is due to expire in June 2025.
Britain's Financial Conduct Authority on Thursday said competition in some parts of the wholesale data market, which includes prices and volumes traded on exchanges, is not working as well as it should, and it was launching a market study.
"It's an important part of our business, a very competitive market for data on a global basis, so not a concern there," Schwimmer said.
($1 = 0.8366 pounds)