LSE to buy Citi’s bonds analysis and indexes business for $ 685 m

Reuters: London Stock Exchange (LSE) has agreed to buy The Yield Book, Citigroup’s fixed-income analytics service and also its related indexing business, for $685 million in cash, the companies said on Tuesday.

LSE, which had said it would be looking out for investments after the collapse of its proposed merger with Deutsche Boerse , said the deal would boost the data and analytics capabilities of its information and FTSE Russell indexes business and take assets under management using its indexes to about $15 trillion.

The deal, which is subject to regulatory clearances and is expected to close in the second half of this year, is expected to add $30 million in synergy benefits to LSE’s revenues over the first three years after completion and bring $18 million in cost savings over the same period, the company said.

Last year it estimated the business being acquired would have generated earnings before interest, tax, depreciation and amortisation of $46 million on revenue of $107 million.

LSE, which bought stock index provider and asset manager Russell Investments in 2014, expects the EBITDA margin to rise to at least 50% within three years of the deal’s completion, the company said.

“The acquisition of The Yield Book and Citi Fixed Income Indices supports the continued strong growth and development of London Stock Exchange Group’s Information Services division,” said Mark Makepeace, CEO of FTSE Russell.

The Yield Book and Citi Fixed Income Indices have a client base of more than 350 institutions offering services used to analyse fixed income instruments including mortgage, government, corporate and derivative securities, Citi said.

Citi Fixed Income Indices includes the World Government Bond Index.