London Stock Exchange acquires Millennium IT for US$30m

The London Stock Exchange Group plc today announced in a statement on its website that it has agreed to acquire Millennium IT, a Sri Lankan-based technology services company serving the capital markets industry, for US$ 30 million.Millennium IT’s high performance technology will provide the Group with a highly scalable and very low latency in-house developed trading system with multi-asset class functionality and quicker product speed to market. In addition, the transaction will give MillenniumIT the backing of the Group to enable it to develop further its global exchange technology business. MillenniumIT will retain its culture of innovation and creativity, build on its commercial operations and continue serving its existing clients, with its CEO, Tony Weeresinghe, reporting directly to Xavier Rolet. Xavier Rolet, Chief Executive of London Stock Exchange Group, said:“Improving our technology and increasing our competitive position in the fast-moving trading environment is vital. This transaction enables the Group to implement a new, more agile, innovative and efficient IT capability for our future business development as well as running a new cash trading platform which will provide substantially lower latency, significantly higher capacity and improved scalability. “It will also offer cost saving opportunities in the future and give the Group a footprint in Asia. Moreover, MillenniumIT is a proven business, already serving multiple clients in multiple geographies, including some of the best known in their fields. The potential from this transaction is considerable for both parties.”Tony Weeresinghe, CEO of MillenniumIT, said:“This transaction with London Stock Exchange Group is a tribute to the innovative culture of our company, the quality of our technology solutions and our deep pool of talented staff. The Group’s backing gives us the resources to continue supporting our existing customers, expanding the company into other markets and investing for the future.”David Lester, Director of Information and Technology, London Stock Exchange Group, said:“MillenniumIT are a leader in developing low cost high performance trading platforms and financial markets software. Going forward, as well as serving existing and new clients, they will be the Group’s in-house software development team, gradually replacing our current suppliers and bringing intellectual property and know-how fully within the company. We look forward to introducing their proven trading platform before the end of 2010, which will provide our clients with sub-millisecond trading latencies and give the Group a very fast, multi-product, cost-efficient, scalable trading platform. The transition will be carefully managed, with further enhancements to TradElect planned in the interim.”The Group will begin migrating clients to MillenniumIT’s trading system from the end of 2010, replacing TradElect, Infolect, and other interfaces. The new platform will allow the Group to enrich its functionality, in particular for Italian clients, with the possibility of accommodating both trading after hours and stop loss orders.IT development and operational costs for the Group will be reduced, resulting in estimated annual cost savings of at least £10 million from FY2011-12.Depreciation of investment in the current TradElect trading platform will be accelerated as a result of the transaction, and further planned upgrades that take place in the interim will be taken as operating expenses in the period they occur. In total, these are expected to represent non-recurring incremental costs of £25 million in FY2010 and £6 million in FY2011. Under the terms of the Offer, the Group has offered to acquire 100 per cent of MillenniumIT’s shares for cash consideration with a share alternative. It is estimated that 73 per cent of the total deal consideration will be paid in cash, with the rest in new LSEG shares to be issued, estimated at around 600,000 shares.The Group has already received irrevocable undertakings representing over 90 per cent of the shares in MillenniumIT.