London Stock Exchange shares tumble on Refinitiv merger costs
Shares in the London Stock Exchange Group (LSEG) tumbled today after the company revealed its $27bn mega-merger with Refinitiv will cost more than expected and lead to job cuts.
The stock market operator said it expected capital expenditure to hit £850m this year, with £150m of associated operating costs.
This marked an increase in the mid single-digits and was higher than analysts had expected.
Chief executive David Schwimmer also warned that the integration with Refinitiv, which will create a major new player in the financial data market, will lead to job cuts.
He did not put a figure on the cuts, but said there will be a reduction in “overlapping senior leadership” this year.
Shares in LSE Group closed down more than 14 per cent — the company’s biggest single-day fall in a year — as the comments spooked investors.
‘Unprecedented’ challenge
It came after LSE reported a five per cent rise in profit in 2020 despite the “unprecedented challenges” of Covid-19.
The bourse-owner said that adjusted operating profit climbed from £1.06bn to £1.1bn last year, while total revenue grew three per cent to £2.1bn.
On the back of the results, the firm has proposed a 51.7p per share dividend, pushing the full year payout up seven per cent to 75p per share.
LSEG said that the hike was a sign of its “confident outlook” for the year ahead.
In January, the LSEG finally completed its $27bn (£19.7bn) takeover of Refinitiv after the deal was given the green light by EU regulators.
The firm said that the deal would cement its position as a leading global financial markets infrastructure and data provider.
It added that as a result it now had a “significant presence” in North America, Europe, Asia, and emerging markets.
Chief executive David Schwimmer said: “The Covid-19 pandemic and broader geo-political events presented unprecedented challenges in 2020.
“Despite this environment, and with the vast majority of employees working remotely across our global locations, LSEG has delivered for its customers and provided a strong financial performance, demonstrating strong operational resilience.
“We continue to innovate and work in partnership with our customers to develop our services, in areas such as reference rate reform and sustainable investment.”