London Stock Exchange (LON: LSE) decided to purchase the Citibroup (NYSE: C) owned Yield Book platform for $ 685 million in cash. The latter provides analytical information on fixed income securities, as well as related index business, the company said on Tuesday.
According to LSE, which previously stated its intention to study possible investment directions after a failed attempt to merge with Deutsche Boerse, the transaction will enable its information services division to provide customers with more data and analytics, and increase the total amount of all assets under the control of the Exchange to about $ 15 trillion.
The transaction must be approved by the regulatory authorities and is expected to be completed in the second half of this year. LSE expects that the synergistic effect of the purchase will allow it to increase revenue by $ 30 million within the first three years after the deal closes and save about $ 18 million over the same period.
According to last year's estimates of the company, the acquired business could provide a profit before interest, taxes, depreciation and amortization of $ 46 million with revenue of $ 107 million.
LSE, which in 2014 bought the index provider and managing company Russell, expects that the EBITDA margin will rise by at least 50% within three years after the completion of the deal, the company said.
"The acquisition of the Yield Book and Citi Fixed Income Indices will help continue the significant growth and development of the information services division of the London Stock Exchange Group," said FTSE Russell CEO Mark Makepeace.
According to Citi, the analytical platform Yield Book and the index business of Citi Fixed Income Indices, which includes the World Government Bond Index, have a customer base of more than 350 organizations, offering services that are used to analyze fixed income instruments, including mortgage, government, corporate securities and derivatives.