By Tessa Walsh
LONDON (LPC) - Hong Kong Exchanges and Clearing will finance its unsolicited £31.6bn cash-and-share takeover bid for the London Stock Exchange with a combination of cash and new credit facilities, according to its announcement on Wednesday.
The proposed acquisition would be done via a scheme of arrangement and is conditional on the LSE terminating its acquisition of data company Refinitiv.
The LSE announced in August that it had agreed to buy Refinitiv in a US$27bn deal aimed at transforming the exchange into a market data and analytics giant.
HKEX is being advised exclusively by Moelis & Company on its bid for LSE, and last tapped the loan market in June 2012 to finance its £1.4bn purchase of the London Metals Exchange.
HKEX raised a £543m one-year bridge loan via Deutsche Bank, HSBC and UBS to fund the LME acquisition. That loan was priced at 65bp over Libor, with a step up to 85bp. China Development Bank also provided a US$1.8bn three-year bilateral loan.
LSE said it is committed to, and continues to make good progress on, its proposed acquisition of Refinitiv, which is being financed by a US$13.5bn bridge loan that has been underwritten by Barclays, Goldman Sachs and Morgan Stanley. Relationship banks were offered tickets of US$1bn each.
LSE expects its acquisition of Refinitiv to complete by the second half of 2020, and will have to pay Refinitiv a break fee of £198.3m if it decides not to proceed with the acquisition. HKEX has an initial bid deadline of October 9.
Refinitiv, the parent company of LPC and IFR, is majority owned by a consortium lead by US private equity firm Blackstone, which bought a 55% stake in Thomson Reuters’ Financial & Risk business in October 2018 for US$20bn in the largest leveraged buyout since the financial crisis. Thomson Reuters owns the remaining 45% stake.
The US$13.5bn bridge loan for investment-grade rated LSE was expected to refinance the US$13.5bn leveraged loan and high-yield bond financing that was put in place last year to finance Blackstone's acquisition of Refinitiv.
(Editing by Christopher Mangham)