LSE to buy Citi’s Yield Book business for $685 million
LONDON: London Stock Exchange has agreed to buy The Yield Book, Citigroup’s fixed-income analytics and indexing business, for $685 million in cash, the companies said on Tuesday.
LSE, which has said it would explore investments to drive growth after the collapse of its proposed merger with Deutsche Boerse, said the deal would boost the data and analytics capabilities of its information services and FTSE Russell franchise businesses, including an increase in benchmark assets under management to about $15 trillion.
The deal, which is subject to regulatory clearances and is expected to close in the second half of this year, is expected to add $30 million in synergy benefits to LSE’s revenue over the first three years after completion and bring $18 million in cost synergies over the same period, the company said.
Last year it estimated the business being acquired would have generated earnings before interest, tax, depreciation and amortization of $46 million on revenue of $107 million based on a pro forma estimate of the central costs to be allocated to the business under the LSE’s ownership.
LSE, which bought stock index provider and asset manager Russell Investments in 2014, expects the EBITDA margin to rise to at least 50 per cent within three years of the deal’s completion, the company said.
“The acquisition of The Yield Book and Citi Fixed Income Indices supports the continued strong growth and development of London Stock Exchange Group’s Information Services division,” said Mark Makepeace, CEO of FTSE Russell.
The Yield Book business has a client base of over 350 institutions with its services used to analyse fixed income instruments including mortgage, government, corporate and derivative securities, Citi said.
Citi Fixed Income Indices includes the closely watched World Government Bond Index.
Citi was advised on the deal by its Institutional Clients Group.
Skadden, Arps, Slate, Meagher & Flom LLP served as legal advisor to Citi. Barclays acted as financial advisor to LSE, while Freshfields Bruckhaus Deringer was counsel.