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LSE moots Borsa Italia sale to complete Refinitiv deal

Record activity in first half translate to uptick in revenue across the board
July 31, 2020

London Stock Exchange Group (LSE) said in March it would complete the Refinitiv purchase by the end of the year. The company has now flagged it could be early 2021 before the $27bn (£20.6bn) deal closes. 

IC TIP: Hold at 8,588p

The hefty regulatory sign-off process could see the LSE put its interest in fixed-income market MTS or even the whole Borsa Italiana group up for sale. The exchange company seems confident in a deal, saying it could also complete a sale by the end of the year or in early 2021. 

One interested party is an actual party, according to media reports: Italy’s Five Star Movement, which is part of the ruling coalition, has said in a statement that the government should enter a bid for Borsa Italiana. 

Looking at the LSE’s performance over the first six months of 2020, it has turned greater market activity into like-for-like revenue increases across the board and an adjusted operating profit increase of 9 per cent to £575m. 

Costs were also up in the period compared with the first half of 2019. Adjusted operating expenses climbed 9 per cent to £537m, and depreciation and amortisation charges were also on the rise. 

Chief executive David Schwimmer said there had been record volumes across the LSE’s trading venues and clearing houses in the half. Despite this surge of activity on the investor side, the capital markets division’s performance shows there was some imbalance in the period. New issues across the two London exchanges and the Borsa Italia fell 41 per cent in the period. 

Consensus forecasts compiled by FactSet place adjusted EPS at 208p for the full year, up from 198p in 2019.  

LONDON STOCK EXCHANGE (LSE)   
ORD PRICE:8,588pMARKET VALUE:£ 30.1bn
TOUCH:8,586-8,590p12-MONTH HIGH:8,658pLOW: 5,300p
DIVIDEND YIELD:0.9%PE RATIO:75
NET ASSET VALUE:1,067p*NET DEBT:14%
Half-year to 30 JunTurnover (£bn)Pre-tax profit ($m)Earnings per share (p)Dividend per share (p)
20191.0236370.720.1
20201.0636264.623.3
% change+4-0-9+16
Ex-div:20 Aug   
Payment:22 Sep   
*Includes £4.6bn in intangible assets or 1,312p a share