London Stock Exchange splashes out £535m in swoop for Citi analytics arm

● First major purchase by LSE since collapse of Deutsche Borse deal

The London Stock Exchange (LSE) has swooped for its first big acquisition since its planned merger with Deutsche Borse was derailed earlier this year, paying $685 million (£535m) for a US analytics business.

The London exchange, whose proposed tie-up with its Frankfurt rival collapsed amid EU competition concerns, announced yesterday that it was buying The Yield Book, American investment bank Citigroup’s fixed income analytics service and its related world government bond index (WGBI).

Yesterday’s deal is also subject to regulatory approval, with the LSE saying it would boost the data and analytics capabilities of its information and FTSE Russell indexes business.

It will take assets under man- agement using its indexes to about $15 trillion (£12 trillion), with the LSE saying the takeover would also produce costsavings of $18m (£14m) over three years.

Mark Makepeace, chief executive of FTSE Russell, 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.

“The acquisition represents a significant step for FTSE Russell to acquire a world-class fixed income analytics and index business, enhancing our ability to provide customers with broader multi-asset capabilities and a deeper data and analytics offering.”

The LSE estimated that last year the business being acquired would have generated underlying earnings of $46m on revenues of $107m.

It added that the acquisition will be bankfolled by cash and loans, and should be completed by the second half of this year.

Citi said The Yield Book and Citi Fixed Income indices have more than 350 institutional clients offering services used to analyse fixed income instruments including mortgage, government, corporate and derivative securities.

Numis Securities said: “This represents a very sensible deal as it helps the London Stock Exchange Group grow its highly attractive information services division.”

EU regulators killed off the London Exchange’s proposed £24 billion merger with Deutsche Borse at the end of March, saying the deal would have forged a “de facto monopoly”.

The European Commission said the two exchanges had failed to address its competition concerns, while some analysts had previously cited Brexit as another complicating factor.