Pearson sells £450m stake in FTSE to London Stock Exchange

The London Stock Exchange (LSE) has agreed to pay Pearson £450m to buy out its 50pc stake in FTSE International.

The deal – the LSE’s biggest since its acquisition of Borsa Italiana in 2007 – will give the stock exchange group control of the stock market index compiler, which provides data to pension funds and asset managers looking to invest capital.

FTSE International was originally set up as a joint venture between Pearson and the LSE over a decade ago. The LSE, which is run by ambitious chief executive Xavier Rolet, appears to be paying a high price for it.

In 2010, FTSE reported total revenues of £98.5m and total earnings before interest, taxes, depreciation, and amortisation (ebitda) of £40m. This means the LSE is effectively paying around 22.5 times ebitda for FTSE International.

An LSE spokesman said it could pay such a high price because of the “potential synergies”, such as cost-cutting and cross-selling, the company could generate from merging FTSE International with its existing operations.

Following the LSE’s failed merger with Canadian exchange TMX earlier this year, Mr Rolet has decided to pursue an aggressive acquisition strategy to compete with larger rivals, including Deutsche Borse and NYSE Euronext.

The LSE is also in exclusive talks with LCH.Clearnet about taking a controlling stake in the clearing house.

For Pearson, the sale of its FTSE International stake triggered fresh speculation that the company may soon dispose of some or all of its financial publishing assets, such as the Financial Times.

However, a spokesman for the company said: “Today’s transaction has no bearing on other parts of the FT Group, which Pearson has been investing in and will continue to invest in both organically and through bolt-on acquisitions.”