London Stock Exchange (LSE) is to take full control of FTSE International by buying the 50 per cent stake owned by Pearson for £450m.
The London-based publishing group is selling its stake in the FTSE International businesses as part of its shift in focus away from data and onto news and analysis. The LSE believes the purchase could help develop its derivatives business and compete with Europe’s major futures exchanges, including Deutsche Boerse’s Eurex and NYSE Euronext’s Liffe.
LSE director of information services and FTSE International chairman David Lester said: “Crucially, it is an excellent fit for our growing derivatives operations and will help us develop new tradeable products.”
The company already has key relationships with banks and the sell part of the business, while it also has trading platforms such as Turquoise, but the deal to buy out the rest of FTSE International should give it more access to investors. Pearson, which also owns the Financial Times newspaper and Penguin Books, has secured a very good price for a business that was no longer key to its strategy, analysts said.
FTSE International CEO Mark Makepeace said: “FTSE is already a top three global index provider and this transaction is a natural next step in accelerating our global expansion ambitions. The industry trends and the appetite for our products are strong. Together with LSE, we will fully focus on geographical and product-driven expansion, further strengthening our offerings in the ETF (exchange-traded fund) and derivatives spaces and further diversifying our revenue streams.”
Pearson’s sale of FTSE International could also increase speculation that it will eventually look to sell the FT Group as it becomes more focused on online subscription, education and analysis. However, analysts are divided on this decision and any sale is unlikely to take place in the near future.
Pearson chief executive Marjorie Scardino said: “Proud as we are of that long association, FTSE’s strategy is different from our own. We wish it every success as we continue to build our digital business information services around the Financial Times.
“For Pearson, the transaction further strengthens our financial position at a time of significant macroeconomic turbulence. We are freeing up capital for continued investment in a proven strategy: becoming more digital, more international and more service-oriented in education, business information and consumer publishing.”