Refinitiv was bought for ~$27bn from Blackstone (private equity). Of note, Blackstone had led a consortium to buy Refinitiv from Thomson Reuters for $20bn just ten months earlier. On the basis that no company organically increases its value by 33% in 10 months, one may conclude that either Blackstone achieved a bargain price or LSEG over paid.

Since Blackstone's acquisition was leveraged, it essentiall doubled its money in under a year. This caused a backlash and claims that it was a wealth transfer from LSEG shareholders.

This was a superficial take by the sensationalist media. The situation is rather more nuanced in reality.

For LSEG, Refinitiv was an asset that had greater value when combined with the LSEG franchise than it had stand alone under PE ownership. For LSEG, the deal was about transforming from a traditional exchange business into a global financial data and analytics powerhouse to better compete with giants like Bloomberg.

The overpayment argument is better seen through the lens of "extensive technical debt from years of underinvestment". Refinitiv was an assemblage of data businesses cobbled together over decades, which needed significant investment to turn it around.

Furthermore, the leveraged buyout by Blackstone had loaded Refinitiv with significant debt which LSEG had to assume.

This meant LSEG was taking on a company that needed substantial investment and significant cash to service its debt.

Did it overpay? Yes, almost certainly.

Post-acquisition, LSEG has also faced the daunting task of integrating two large, complex organizations. Critics on professional networks point to a slow, bureaucratic culture and strategic missteps, such as migrating users between platforms and branding changes, which have alienated some customers.

LSEG's management called it a "defining moment" and a "rare and compelling opportunity". The logic behind the Refinitiv deal was that data and analytics provide a more stable and growing revenue stream than core trading and listing services, which is difficult to dispute. A comparison of earnings before and after the acquisition shows dramatic growth. This performance has enabled LSEG to return significant capital to shareholders, which suggests that the acquisition has been highly accretive to earnings and has created tangible value for its owners.

The deal also included control of Tradeweb (51% of shares but 80% of the votes) which is very valuable for LSEG.

On the basis that the Refinitiv deal is now done, and in the rear view mirror, focus should be on the road ahead.

Should management be allocating capital to reducing its debt rather than paying dividends and engaging in buy backs at 2.2x book value? Is the book value, which is largely non-depreciateing intanigbles, even reliable? Should the gooodwill be written down, which would improve the optics around RoE, even if it makes no difference to the true unit economics of the business? Each investor is likely to reach a different conclusion.

The question now becomes whether, five years post acquisition, the vastly expanded and transformed LSEG, and its forward earnings potential is being undervalued by the market. Only you can decide.