Citigroup Inc. will sell its Yield Book and fixed income indices to London Stock Exchange Group Plc for $685 million in cash, in a deal expected to close in the second half.
In a May 30 press release, Citi said the sale was in line with its overall push to focus on core businesses and that it "[looks] forward to a long-term, productive partnership" with LSE. Citi will continue to be a Yield Book customer. LSE will retain the division's leadership team and employees.
LSE estimates cost saves of $18 million and revenue synergies of $30 million in the first three years after deal close, taking into account increased index adoption, investments in new products and the alignment of its FTSE Russell with the Yield Book. At the end of the three years, LSE expects an improvement to EBITDA margin of at least 50%. The deal is expected to be accretive to LSE's earnings in the first full year post-completion.
The Yield Book is Citi's fixed income analytics platform and serves approximately 350 institutions worldwide; the indices include its World Government Bond index and are used in the creation of exchange-traded funds and swaps.
Citi was advised by its own institutional clients group. Skadden Arps Slate Meagher & Flom LLP was legal counsel. For LSE, Barclays Bank PLC was financial adviser; Freshfields Bruckhaus Deringer LLP was legal counsel.