London Stock Exchange Group Plc · LSE:LSEG
London Stock Exchange — Merger or Acquisition (November 2019)
45 slides from London Stock Exchange's merger presentation, November 2019
Slide 1: Creating a Financial Markets Infrastructure Leader of the Future
WORKING DRAFT: Subject to Legal Review Creating a Financial Markets Infrastructure Leader of the Future Acquisition of Refinitiv November 2019 Page 1
Slide 2: Disclaimer
Disclaimer No liability whatsoever is accepted and no representation, warranty or undertaking, express or implied, is or will be made by London Stock Exchange Group plc (“LSEG”) or any of LSEG’s subsidiaries, respective legal or financial advisors or respective agents, being their directors, officer
Slide 3: Contents
Contents 1. Creating a financial markets infrastructure (“FMI”) leader of the future 2. Refinitiv: a leading global provider of financial markets data, analytics and infrastructure 3. Industry defining transaction 4. Financial highlights 5. Management and governance Page 3
Slide 4: Key transaction terms
Key transaction terms – All share transaction(1) – Enterprise value of approximately $27bn with an equity value of $14.5bn (2) Purchase price – Total new shares issued to Refinitiv shareholders will result in approximately 37%(1) economic interest and less than 30% voting interest in LSEG – Combined
Slide 5: Creates significant value and reshapes the industry
Creates significant value and reshapes the industry Transforms LSEG’s position as a leading global financial markets 1 infrastructure group Ability to benefit from global growth opportunities with greater range of leading businesses and enhanced strategic balance Significantly enhances LSEG’s custom
Slide 6: Anticipating customer needs in the fast evolving financial markets infrastructure landscape
Anticipating customer needs in the fast evolving financial markets infrastructure landscape Core capabilities Historic landscape Future landscape of future FMI provider Global borderless Geographic constraints trading GLOBAL FOOTPRINT Significant overheads in Automation and digitisation processing o
Slide 7: Positions LSEG for future growth
Positions LSEG for future growth LSEG has successfully capitalised on structural trends Acquisition positions LSEG for growth in ongoing in the past through M&A and organic strategies evolution of financial markets 3 Technology-enabled Multi-asset investment 4 Regulatory driven innovation and tradin
Slide 8: Creates a new global financial markets infrastructure leader
Creates a new global financial markets infrastructure leader – A leading global financial markets – A leading global provider of data, analytics infrastructure business 1 and financial markets solutions – Successful open access philosophy and GLOBAL SCALE AND – Open platform promoting partner commun
Slide 9: Delivers attractive financial returns for shareholders
Delivers attractive financial returns for shareholders Enhanced revenue (1) – c.70% recurring subscription-based revenue up from c.40% 1 mix with attractive – 5-7% revenue CAGR targeted over the first three years post growth completion – Annual run rate cost synergies in excess of £350m 2 Significan
Slide 10: Refinitiv: a leading global provider of financial markets data, analytics and infrastructure
Refinitiv: a leading global provider of financial markets data, analytics and infrastructure Page 10
Slide 11: A leading financial markets data and infrastructure provider serving over 40,000 customers
A leading financial markets data and infrastructure provider serving over 40,000 customers in approx. 190 countries Data, distribution, analytics and workflow Venues Risk WM / REUTERS FX BENCHMARK Refinitiv Data Platform (1) Open data platform and core capabilities in data collection, integration, d
Slide 12: Refinitiv's data and analytics operating model
Refinitiv’s data and analytics operating model Core capabilities in data content and data management 40,000 customers across 4 key communities – Sell-side trading desks Refinitiv Data Platform (1) – Hedge funds Trading – Asset managers – Treasury management Data aggregation, management, – Risk manag
Slide 13: Benefit from market shift in data distribution preferences
Benefit from market shift in data distribution preferences given Refinitiv’s multi-channel capabilities Data market trending away from desktops towards Examples of Refinitiv products delivered via feeds or other distribution via alternative channels channels • Clients see growing value in feeds as d
Slide 14: Accelerating revenue growth and improving efficiency
Accelerating revenue growth and improving efficiency Revenue growth profile (1) – Expanded data platform capabilities including cloud 4.9% distribution – Improved sales force and service effectiveness Acceleration driving product retention of revenue 1.9% – New content sets, derived content and anal
Slide 15: Successfully transforming Refinitiv's data business and accelerating topline growth
Successfully transforming Refinitiv’s data business and accelerating topline growth Strategic Initiatives Illustrative Actions ✓ Entered into agreements with MarketAxess and Tradeweb to Expansion of – Number of initiatives underway to distribute fixed income data further expand Refinitiv’s content a
Slide 16: Industry defining transaction
Industry defining transaction Page 16
Slide 17: Creates significant value and reshapes the industry
Creates significant value and reshapes the industry 1 Transforms LSEG’s position as a leading financial markets infrastructure group, expanding its global footprint and accelerating its strategy Significantly enhances LSEG’s customer proposition in data and analytics, accelerating 2 opportunities in
Slide 18: Transforms LSEG's position as a leading financial markets infrastructure group
1 Transforms LSEG’s position as a leading financial markets infrastructure group ✓ Refinitiv complements LSEG across the financial markets value chain DataStream – Trading venues generate proprietary multi-asset TREP class data Refinitiv – Data and analytics enable trading and Data investment decisi
Slide 19: Creates a global footprint with significant growth opportunities
Creates a global footprint with 1 significant growth opportunities 2018 Revenue diversification 40% 32% 15% 45% UK Rest of UK Rest of (1) World World £6.8bn £2.1bn £4.6bn (2) 28% 40% North North America America Combined 23% 41% UK Rest of World Growth opportunities in existing and new geographies 36
Slide 20: A leading index and analytics business and a global data platform
A leading index and analytics 2 business and a global data platform (2) FX and fixed income Leading $15tn $3.5tn High value pricing, earnings 10,000 multi-asset proprietary Data partners Assets benchmarked Fixed income assets estimates, ESG, global index to FTSE Russell benchmarked (1) and third par
Slide 21: Transforms customer proposition in data and analytics
Transforms customer proposition 2 in data and analytics 4 3 Innovation through new 2 data-enabled services Distribution to broader 1 Enables continued customer base – Create new data-enabled services in growth areas index growth – Open platform based Adds attractive approach with 400,000 end – Impro
Slide 22: Group is well positioned for growth in data and analytics
2 Group is well positioned for growth in data and analytics Global market for financial information growing at c.5% p.a. Well positioned to participate in key areas of future growth $ bn Growth Drivers Combined Business 1 – Passive AUM – A leading index and 30.5 Shift to expected to more than benchm
Slide 23: Creates a diversified multi-asset capital markets business
Creates a diversified multi-asset 3 capital markets business Equities eBlock • Adds high-growth asset classes to existing product suite • Aligns with secular drivers for FX long-term growth – Electronification of fixed income markets at early stages Fixed income Fixed Income and Money – Shift from a
Slide 24: We share core principles of open access and customer partnership
We share core principles of open 4 access and customer partnership – Provide access to all markets and – A leading open access data platform products for a wide range of users including Open access distributing proprietary and third party content competitors’ venues and platforms and applications Cu
Slide 25: Diversifies customer network with increasing touchpoints across customer base
4 Diversifies customer network with increasing touchpoints across customer base 20 / 20 Top 10 400,000 40,000+ Top ETF issuers(1) Investment banks(1) End users Customers Expanded client base 98 / 100 >70% Sell-side, buy- 5,000+ Top asset managers(1) Of largest Group clients side and Investment firms
Slide 26: Financial highlights
Financial highlights Page 26
Slide 27: Delivers attractive financial returns for shareholders
Delivers attractive financial returns for shareholders – High quality business mix increasing recurring subscription-based revenue from c.40% to c.70% High quality revenue (1) 1 mix with attractive growth – Revenue CAGR of 5-7% targeted over the first three years post completion – Strong geographic
Slide 28: Multiple engines to drive revenue growth
1 Multiple engines to drive revenue growth 5-7% revenue(1) CAGR targeted over the first three years post completion Continued performance of LSEG’s current Accelerating revenue growth of Refinitiv’s Data, 1 business 2 Distribution, Analytics and Workflow businesses – Continued growth in FTSE Russell
Slide 29: Significantly enhances business mix with larger proportion of recurring subscription-based revenue
1 Significantly enhances business mix with larger proportion of recurring subscription-based revenue Combined £2.1bn (1) £4.3bn (2) £6.4bn 39% 61% 83% 17% Recurring Non- Recurring Non- 68% 32% recurring recurring Recurring Non- recurring 2018 revenue by type Note: (1) LSEG revenue includes treasury
Slide 30: Track record of growth in both businesses
Track record of growth in both 1 businesses Continuous Growth at LSEG Accelerating growth at Refinitiv 5,800 5,739 2,400 5,700 Total Revenue(2) ($m) 2,200 2,135 Total Revenue(1) (£m) 1,955 5,600 2,000 5,500 5,472 1,800 1,657 5,372 1,600 5,400 1,400 5,300 1,200 5,200 1,000 5,100 2016 2017 2018 2016 2
Slide 31: Growth opportunities in each of the combined company's key segments
Growth opportunities in each of the 1 combined company’s key segments Pro Forma Business Mix(1) (2) (2018A) Key Growth Drivers 41% 26% – Passive and alternative investment AUM expected to more than double by Trading Investment & 2025 Advisory Information – Digitisation, AI and automation driving dem
Slide 32: Delivers annual run rate revenue synergies in excess of £225m
2 Delivers annual run rate revenue synergies in excess of £225m Cross-selling and distribution – Distribution of Yield Book analytics via Refinitiv platform 60% – Distribution of Refinitiv pricing and reference data to LSEG Cross- Selling index customers & Distribution (1) – LSEG index distribution
Slide 33: Aligned efficiency initiatives support annual run rate cost synergies in excess of £350m
2 Aligned efficiency initiatives support annual run rate cost synergies in excess of £350m Cost synergies delivered through wide ranging efficiency programme: 50% Corporate & – Corporate and employee-related efficiencies: Removing Employee- duplication and leveraging wider geographic footprint, Rela
Slide 34: Delivers attractive returns for shareholders and maintains current LSEG capital management framework
3 4 Delivers attractive returns for shareholders and maintains current LSEG capital management framework Financial targets Revenue 5-7% revenue CAGR targeted over the first three years post completion (1) Growth EBITDA Target adjusted EBITDA margin of around 50% in the medium term post completion (2
Slide 35: Management and governance
Management and governance Page 35
Slide 36: Management and governance
Management and governance – Combined business will be chaired by LSEG’s Chairman Don Robert and led by LSEG’s CEO David Schwimmer Management – Refinitiv’s CEO David Craig will join LSEG’s Executive Committee and continue as CEO of Refinitiv – 3 new members to be added to the Board: 2 from Blackstone
Slide 37: Transaction Update
Transaction Update ➢ Transaction remains on track to close in H2 2020 ➢ Regulatory approvals process and integration planning underway Detailed integration planning currently in preparation phase LSEG and Refinitiv have track records of integrating acquisitions ✓ David Shalders appointed Chief Integ
Slide 38: Post transaction shareholding structure
Post transaction shareholding structure • Lock-up for the first 2 years post completion • Thereafter, ability to sell: Lock-up period – 1/3 in year 3 post completion – 1/3 in year 4 post completion • Lock-up ends in year 5 post completion • Standstill to apply for 3 years post Refinitiv Current Stan
Slide 39: Transaction creates significant value and reshapes the industry
Transaction creates significant value and reshapes the industry Transforms LSEG’s position as a leading financial markets infrastructure 1 group, expanding its global footprint and accelerating its strategy Significantly enhances LSEG’s customer proposition in data and analytics, 2 accelerating oppo
Slide 40: Appendix
a Appendix Page 40
Slide 41: Transaction terms
Transaction terms Structure and – All share transaction(1) Purchase Price – LSEG to acquire Refinitiv for an enterprise value of approximately $27bn, with an equity value of $14.5bn (2) – New shareholders will receive c.204.4m shares based on VWAP share price of $71.12(3) from 1st July to 26th July,
Slide 42: Refinitiv products overview (non exhaustive)
Refinitiv products overview (non exhaustive) Relevant Refinitiv proposition Product Description group AlphaDesk Venues A cloud-based Order Management System (OMS) offering order and portfolio management, risk, and compliance solutions for buy-side clients Benchmarks: provide several benchmark produc
Slide 43: Refinitiv products overview (non exhaustive)
Refinitiv products overview (non exhaustive) Relevant Refinitiv proposition Product Description group FXall is a market leading multibank FX platform with average daily volumes of approximately $200bn. It connects customers with all types of FX market participants, including banks, hedge funds, and
Slide 44: Refinitiv products overview (non exhaustive)
Refinitiv products overview (non exhaustive) Relevant Refinitiv proposition Product Description group Thomson ONE provides a comprehensive front office solution for wealth management. It includes customizable book of business dashboards, and a sales proposal module allowing advisors to rapidly creat
Slide 45: Contacts
Contacts Paul Froud London Stock Exchange Group plc Head of Investor Relations Tel: +44 (0)20 7797 1186 10 Paternoster Square email: pfroud@lseg.com London EC4M 7LS Gaurav Patel Investor Relations Senior Manager Tel: +44 (0)20 7797 1154 For information on the Group: email: gpatel@lseg.com www.lseg.c
London Stock Exchange Group — Merger or Acquisition (November 2019) on 6ix