Elliott urges London Stock Exchange Group to divest assets and buy back £5 billion worth of shares
According to sources familiar with the matter, Elliott Investment Management is pressuring London Stock Exchange Group (LSEG) to initiate a business portfolio review and to push for a stock buyback program worth £5 billion ($6.8 billion) within the next 12 months.
Sources, who requested anonymity due to the confidential nature of the information, said that this activist hedge fund led by Paul Singer is calling on LSEG to evaluate its complex structure, which encompasses data services, exchange operations, and a 51% stake in the US-listed Markets Inc.
Following the release of this report, LSEG’s ADRs in New York surged as much as 6.4%.
Recently, LSEG’s stock price has come under pressure, as shares of companies facing risks from artificial intelligence (AI) disruption have generally declined. The sources noted that Elliott hopes LSEG will enhance investor education to help them understand how it benefits from AI, with its sticky data business potentially seeing increased demand from AI applications, while its market operations are largely unaffected.
Sources also said that Elliott is urging the company to improve operations to boost profit margins and narrow the gap with its peers. LSEG is currently valued below other data companies such as S&P Global, Moody’s, MSCI Inc., as well as exchange operators like Cboe Global Markets Inc., CME Group, and others.
The sources stated that this activist investor believes LSEG is strong but misunderstood by the market. The company holds a leading position in the complex derivatives clearing sector, its FTSE 100 index business is benefiting from the shift towards passive investing, and its proprietary data is widely used by banks and asset managers for regulatory reporting and other functions. The sources added that Elliott is not pushing for an outright sale of LSEG nor demanding a breakup of its historic exchange operations.
“LSEG maintains proactive and open communication with investors and remains focused on executing its strategy,” LSEG said in a statement.
Editor: Li Tong
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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