London Stock Exchange Group is in talks to buy New York-based financial data business Octus for £2.6billion in a reversal of the trend for US predators to snap up British firms.
LSEG confirmed it was in discussions to acquire Octus from private equity firm Permira, following a report by news agency Reuters.
London-based Permira had acquired a controlling stake in the business in a 2022 deal valuing it at £1billion. It has been planning a sale since last year and has held talks with other potential buyers.
Octus provides information for credit markets, focused on companies in financial distress, for banks and investors – employing journalists, analysts and legal experts, and technology, to scour regulatory and court filings.
LSEG said the firm has a leading position in the ‘high growth’ area of illiquid and private credit with ‘a strong track record of double-digit revenue growth based on a high-retention subscription model’.
It said buying Octus would immediately boost revenue growth. It added that no final agreement had been reached and a deal was not guaranteed.
LSEG owns the London stock exchange but its biggest business is data and analytics
Any transaction would need to be approved by regulators.
LSEG owns the London Stock Exchange but earns most of its money through its data and analytics division. In 2021 the group snapped up giant financial data and news provider Refinitiv in a transformational £20billion deal.
Shares closed 4.7 per cent, or 410p lower, at 8350p after details of the Octus talks were revealed.
RBC analyst Ben Bathurst said the market reaction looked ‘overdone’ with the deal unlikely to jeopardise the group’s plans for £3billion of share buybacks.
Bathurst added: ‘The fact that LSEG has confirmed a specific consideration figure leads us to believe that discussions are fairly advanced.’
The potential multi-billion pound takeover of a US firm bucks a worrying trend which has seen the London stock market fall victim to a takeover frenzy.
In a report this week, City broker Peel Hunt sounded the alarm over the ‘unprecedented pace’ of merger and acquisition activity, with 166 takeovers worth £180 billion since the start of 2023 including £74 billion so far this year.
Among those to have been targeted this year are airline Easyjet, warehouse giant Segro, Lloyd’s of London insurer Beazley, finance house Schroders and ingredients maker Tate & Lyle.
However, there have been just 11 new listings worth £6 billion through so-called initial public offerings (IPOs) since 2023.
At the same time, firms including Paddy Power owner Flutter and travel giant Tui have quit the London market for rival exchanges in New York and Europe.
‘To say that the UK has a problem retaining its companies and listing new ones would be a massive understatement,’ said Peel Hunt’s head of research Charles Hall.
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