The size of the pending sale of financial analytics provider Refinitiv sets a high bar for the largest private equity deal announced globally this year.
London Stock Exchange Group PLC is buying Refinitiv from a Blackstone Group Inc.-led consortium and Thomson Reuters Corp. in a deal with a transaction value of $29.05 billion, according to S&P Global Market Intelligence's calculation. The deal marks the largest announced transaction involving private equity globally so far in 2019. It also dwarfs 2019's second-largest announced private equity sale, which is Aisling Capital LLC exiting Loxo Oncology Inc. in a $7.39 billion transaction with Eli Lilly and Co., according to S&P Global Market Intelligence data.
The Refinitiv sale comes less than a year after Blackstone and fellow investors including Canada Pension Plan Investment Board and GIC Pte. Ltd. acquired a 55% stake in Thomson Reuters' Financial & Risk business, which was renamed following the deal's close.
As part of the sale to LSE, the current owners of Refinitiv will become LSE's largest shareholders, holding 37% of shares with less than 30% of total voting rights. The deal includes lock-up provisions for Refinitiv and the Blackstone-led consortium following completion, which stipulates they will have to remain invested for at least two years. The lock-up arrangements will terminate at the end of the fourth year following the deal's closing.
The largest private equity acquisition announced so far in 2019 was the $14.3 billion buyout of telecommunications company Zayo Group Holdings Inc. by Digital Colony Partners LP and EQT Partners AB. An announced deal that will see an EQT and Abu Dhabi Investment Authority-led consortium acquire Nestlé Skin Health SA for $10.39 billion also marks the third-largest entry in 2019.
The Refinitiv deal is not the only large transaction announced in 2019 involving Blackstone, CPPIB and GIC. The three investors are part of the Hellman & Friedman LLC-led consortium that acquired cloud-based human capital management services provider The Ultimate Software Group Inc. for $10.85 billion, which ranks as the second-largest private equity entry announced so far in 2019.
Zayo and Ultimate Software are take privates, while Nestlé Skin Health is a corporate carve-out from publicly listed Nestlé SA.
The current market looks ripe for large deals with valuations at a high. Private equity funds have also accumulated large amounts of dry powder that is waiting to be deployed, but many buyout firms are being cautious with their capital as they calculate how to make suitable returns on investment.
Private equity volume has dipped globally in the first half of 2019. For example in the U.S., 2,575 private equity entries were announced in the first half, representing a 15.8% year-over-year drop and an 8.7% drop from the first half of 2017, according to S&P Global Market Intelligence data. Add-on acquisitions remained steady with 1,641 add-on deals announced in the first half of 2019, inching up from 1,630 in the first half of 2018. The accumulative transaction value in the first half of 2019 for both announced entries and add-ons, however, increased 28.3% to $304.02 billion, up from $236.91 billion in the first half of 2018.
Looking more broadly across the M&A market, 2019 is on pace to break the record for megadeals' aggregate transaction value since records began, according to S&P Global Market Intelligence data. The first half saw 51 deals of over $5 billion reach a total of $945.65 billion. If megadeals continue at a similar pace and value, this will far surpass records kept since S&P Global Market Intelligence first began collecting data in 1985. The deal announcement for Refinitiv could help megadeals set a higher mark in 2019.