Can anyone out-Bloomberg the Bloomberg?
That will be one of the key questions for London Stock Exchange Group, which is in talks to acquire a Refinitiv, a terminal network for traders and other financial professionals that competes with Bloomberg’s financial data empire. Refinitiv is owned by a consortium of private equity companies led by Blackstone, and it generated $6.3 billion of revenue last year. (This reporter was previously a journalist at Bloomberg News. Uzabase, Quartz’s parent company, runs Speeda, a financial data platform.)
Companies have had little success outflanking founder Michael Bloomberg’s eponymously named company since it started in 1981. The CEO of Symphony, a messaging platform for Wall Street firms backed by the likes of Goldman Sachs and JPMorgan, recently told CNBC that it’s “making a dent in the Bloomberg fortress.” Other upstarts like Money.net, founded in 1999, and more recently Sentieo, have also taken aim.
The challengers may have slowed Bloomberg’s upward trajectory, but nobody has come close to dislodging it. Its terminal business has been relatively flat in recent years at about 330,000 subscribers, but it is still widely seen as the messenger system of choice for fixed-income traders, despite its $24,000-a-year price tag for a single user. Bloomberg has about 33% market share (paywall) for financial data terminals, compared with 22% for Refinitiv, according to the Financial Times, citing Burton Taylor Consulting data.
LSE’s information-services unit has been an engine for revenue growth, and is an area where it has bulked up substantially. In 2017, LSE announced it was buying a fixed-income indexes and analytics business from Citigroup for $685 million. Three years earlier it bought Frank Russell Co., an index provider and asset management company, for $2.7 billion (pdf); LSE kept the index business and hived off the wealth management operations.
If LSE’s $27 billion purchase of Refinitiv gets the go-ahead from regulators and shareholders—which analysts suggest is likely—it may at least refocus the company’s challenge to the New York-based terminal network. It would also be the latest chapter in a growing competition between the companies, which have been steadily closing in on each other’s turf by acquiring financial index providers, which are a means for both companies to diversify away from their core businesses. In 2016, Bloomberg spent around $780 million to buy fixed-income indexes and analytics from Barclays.
Now LSE and Bloomberg’s salespeople could be knocking on even more of the same doors. But while history has shown that it’s hard to out-Bloomberg the Bloomberg, there’s more to the Refinitiv deal than just the terminal business. The company also operates the FXall currency trading platform, and has a majority share in the Tradeweb fixed-income trading platform. A successful acquisition would put LSE in the same league as heavyweight exchange-operators like Intercontinental Exchange, which owns the New York Stock Exchange. LSE would be able to use Refinitiv’s data and analytics to develop new products for its information services division.
Equity market investors appear optimistic. LSE stock touched its highest price on record, rising as much as 15% to 6,547 pence in London. “If this happens, it would transform the LSE into a much bigger, more data-oriented business,” Bank of American Merrill Lynch analysts wrote in a research note. “We think this makes sense.”