CORRECT: LSE Takes Full Ownership Of FTSE From Pearson
12 Dezember 2011 - 10:28PM
Dow Jones News
LONDON (Dow Jones)--London Stock Exchange Group PLC (LSE.LN)
said Monday that it will buy the remaining 50% stake in FTSE
International Ltd. that it doesn't already own from Pearson PLC
(PSO) for GBP450 million in cash ($705.2 million) as part of
broader moves to diversify.
The move highlights the aggressive way in which the LSE is
growing its business through acquisitions. Over the past two years,
it has acquired Turquoise, an erstwhile competitor in European
share trading, as well as Sri Lankan technology provider
MillenniumIT.
Earlier this year, the LSE failed in its effort to acquire
Canada's TMX Group Inc (X.T), operator of the Toronto Stock
Exchange, but is currently in talks to buy a stake in clearing
house LCH.Clearnet Group Ltd. and has been reported to be
interested in buying a stake in the London Metal Exchange.
LSE Chief Executive Xavier Rolet was upbeat about taking full
ownership of the index business, which it has jointly owned with
Pearson for 16 years. "This transaction further delivers on our
diversification strategy, expanding LSEG's existing offering deeper
into indices, derivatives and market-data products and
services."
"Immediately earnings-enhancing, we expect this transaction to
create long-term value and growth for our customers and
shareholders," Rolet said in a statement.
The FTSE 100 index was first calculated by a team within the LSE
in 1984. That small team was spun off into a joint venture between
the LSE and Pearson in 1995.
Pearson--which sold its 61% stake in financial market data
provider Interactive Data Corp. for $2 billion before tax last year
in May--said the LSE deal will strengthen the group's "focus on
global business news, analysis and intelligence, increasingly
delivered through subscription models and digital channels." It
marks the publisher's exit from companies that are primarily
providers of financial data.
Pearson CEO Marjorie Scardino said the LSE deal further
strengthens the group's "financial position at a time of
significant macroeconomic turbulence."
"We are freeing up capital for continued investment in a proven
strategy: becoming more digital, more international and more
service-oriented in education, business information and consumer
publishing," she said in a separate statement.
The U.K.-based company--which has extensive educational
publishing operations and publishes the Financial Times newspaper
and Penguin books-- plans to use the LSE sale proceeds "to support
and accelerate its strategy, investing in its businesses both
organically and through acquisitions of companies with
complementary content, technology and geographic exposure."
Pearson has made several bolt-on acquisitions over the past 18
months or so, aimed at strengthening its education operations.
Pearson said it expects FTSE to make a total post-tax
contribution to its adjusted earnings of approximately GBP18
million, or 2.2 pence a share, in 2011.
The LSE said it will pay for its acquisition using surplus cash
and debt, and also said it has secured another GBP350 million in
loan commitments from banks for "financial flexibility." This
raises the LSE's debt level of about 0.7 times earnings before
interest, taxes, depreciation, and amortization, or Ebitda, to 1.6
times.
LSE Director of Information Services David Lester told Dow Jones
Newswires that the LSE is "comfortable" with its higher level of
debt and that it won't hamper any possible future acquisitions.
"We're comfortable with going even beyond two times if there is
a right opportunity, though we've consistently said that between
one and two times is a comfortable range for us," Lester said.
"We will always be looking for the right opportunities and if
they come along, we will look at our finances, and we'll make sure
that we can participate if needs be," Lester said.
At 1151 GMT, LSE shares were down 4.4% at 784 pence, while the
FTSE 100 index was down 0.5%.
Barclays Capital analyst Daniel Garrod said: "We believe this
makes good strategic sense, is immediately earnings-accretive and
is consistent with previous strategy to expand information
services."
Garrod kept his equal-weight rating and 925 pence target price
on the stock.
Royal Bank of Scotland analyst Paul Gooden said Pearson "looks
like they've got a very good price" for the divestment.
LSE's Lester said the company was paying for the future growth
of FTSE, noting FTSE has grown its Ebitda by an average of 22% over
the past five years and is forecast to grow its 2010 Ebitda of
GBP40 million by 30% in 2011.
The LSE said it expects cost synergies of GBP10 million annually
and gross revenue synergies of GBP18 million annually by the end of
the third year of full ownership of the FTSE.
Under the terms of the agreement, the LSE will continue to use
the FTSE name. The transaction is expected to close by the first
quarter of 2012.
-By Vladimir Guevarra, Dow Jones Newswires. Tel. +44 (0)
2078429486, vladimir.guevarra@dowjones.com
Pearson (NYSE:PSO)
Historical Stock Chart
Von Jun 2024 bis Jul 2024
Pearson (NYSE:PSO)
Historical Stock Chart
Von Jul 2023 bis Jul 2024