Very thorough. Good point on the LTIP peer group comparison and EPS growth for an acquisitive group ROIC would be a better measure. Many years ago Patrick Barton made a similar point about (Sir) Fred and Royal Bank of Scotland EPS growth incentives....we know how that ended!
Great overview of a diverse business. However, on returns, should we be excluding goodwill? Yes, it includes the additional amount paid for Refinitiv’s book value of assets but won’t there always be a premium paid for growth potential which I’d argue was greater than the existing LSEG assets. Also, I think the price paid for Refinitiv was reasonable, a trailing EV/EBITDA of 13x and c.10x post synergies which they have delivered on. I wonder what the returns were immediately after the LCH or Frank Russell acquisitions.
Nice work, I put both Deutsche Boerse and LSE in our team's portfolios back in 2012, we write similar cases like these. Both are great companies.
Very thorough. Good point on the LTIP peer group comparison and EPS growth for an acquisitive group ROIC would be a better measure. Many years ago Patrick Barton made a similar point about (Sir) Fred and Royal Bank of Scotland EPS growth incentives....we know how that ended!
Thank you Bruce, I appreciate the kind words. Indeed, one needs to be wary of EPS driven incentives....
Excellent write-up, enjoyed reading it.
Thanks Jon, appreciate you taking the time!
Wow, amazing analysis. Thanks !
Great overview of a diverse business. However, on returns, should we be excluding goodwill? Yes, it includes the additional amount paid for Refinitiv’s book value of assets but won’t there always be a premium paid for growth potential which I’d argue was greater than the existing LSEG assets. Also, I think the price paid for Refinitiv was reasonable, a trailing EV/EBITDA of 13x and c.10x post synergies which they have delivered on. I wonder what the returns were immediately after the LCH or Frank Russell acquisitions.
this is great analysis, really appreciate the insights.