LSEG nears Octus acquisition to expand credit data business

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LSEG nears Octus acquisition

Highlights

LSEG is nearing the acquisition of Octus, which could be announced as soon as Thursday, to strengthen its credit data offerings.
The Octus purchase would be LSEG’s largest deal since its $27 billion Refinitiv acquisition in 2019 and is expected to be immediately accretive to group revenue growth.
LSEG shares are down 1.7 per cent year-to-date after a 5 per cent drop upon deal talks disclosure, amid ongoing investor pressure and AI-driven industry concerns.

Deal timeline and strategic rationale

As first reported by the Financial Times, LSEG and Octus could announce an agreement as soon as Thursday, according to people familiar with the matter. The proposed acquisition would deepen LSEG’s presence in credit data, where Octus provides information on leveraged finance, private assets and bankruptcy markets.

LSEG confirmed last Tuesday that it is in discussions over a possible deal, saying an acquisition of Octus "would be immediately accretive to LSEG’s data and analytics and group revenue growth". The group generates most of its revenue from selling data across asset classes to banks, brokers, investors and other financial market participants worldwide.

If finalised, the purchase would rank as LSEG’s largest takeover since its $27 billion Refinitiv deal agreed in 2019, which reshaped the company into a broader financial data and analytics provider. Permira bought Octus, then known as Reorg, in 2022 at a valuation of about $1.3 billion.

Market implications for LSEG and Permira

LSEG is pursuing the deal while facing investor scrutiny over returns and competitive pressures in financial data. Activist investor Elliott Management has pressed the company this year over a profitability gap with peers and has urged it to increase share buybacks.

The group has also had to address concerns that advances in AI could disrupt its data business, although its shares have largely recovered from a sell-off in February. LSEG shares are down 1.7 per cent so far this year, after falling 5 per cent on the day it disclosed talks over Octus.

For Permira, a sale at the level under discussion would represent a strong return over a relatively short holding period compared with many private equity investments made in the same period. Permira and LSEG declined to comment, while Octus does not immediately respond to a request for comment.

Our earlier coverage on AI raising the cost of standing still explained how rapid adoption of artificial intelligence is pushing up competitive standards and making “average” performance increasingly unsustainable. We noted that companies need to rethink investment priorities, workforce skills, and operating models to capture productivity gains and avoid losing relevance as automation and data-driven decision-making spread.

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