* EU regulators reviewing LSE's $27 bln takeover of
Refinitiv
* LSE in exploratory talks about Italian arm
* Could result in sale of part or all of Italian arm
* LSE reports 8% rise in H1 profit
(Adds Schwimmer comments, Italian details)
By Huw Jones and Pamela Barbaglia
LONDON, July 31 (Reuters) - The London Stock Exchange (LSE)
said on Friday it may sell all or part of Borsa Italiana
to help get its $27 billion takeover of Refinitiv over the line,
a move that could trigger a bidding war among European exchanges
for the Milan assets.
The London exchange operator said that it had begun
"exploratory discussions" which could result in MTS, Borsa
Italiana's bond trading platform, or its entire Italian arm
being sold.
LSE announced the proposed Refinitiv acquisition last year,
which will broaden its trading business and make it a major
distributor and creator of market data, a profitable and fast
growing sector. It will also make it a rival to Bloomberg.
The European Union's antitrust regulators are currently
reviewing the deal and expressed concern in June about the
combined company's large market share in the trading of European
government bonds because both MTS' trading venue and Refinitiv's
Tradeweb are already market leaders.
LSE Chief Executive David Schwimmer told reporters there
could be "potential benefits" to selling off the Italian
exchange group as a package rather than splitting off MTS.
LSE bought Borsa Italiana for 1.6 billion euros ($1.9
billion) in 2007.
"We are continuing our dialogue with the European
Commission, and I would say that dialogue is very constructive,"
Schwimmer said.
LSE, which reported a rise in first-half profit on Friday,
said it now expects the Refinitiv deal to complete by early
2021, suggesting a potentially longer timeline than the end of
2020 as previously indicated.
Refinitiv, which is 45%-owned by Thomson Reuters,
, the parent company of Reuters News, declined to
comment.
LSE said it was seeing good progress with foreign
investment, antitrust and other regulatory approvals for the
Refinitiv transaction, and that integration planning was well
developed.
Schwimmer said the end of Britain's Brexit transition
arrangements in December would not mean a new UK competition
probe into the Refinitiv deal if it was not completed this year.
BIDDING FIELD
Rival exchanges Euronext and Deutsche Boerse
are both expected to be interested in the LSE's
Italian operations, banking sources have said.
Euronext has repeatedly expressed interest in adding Borsa
Italiana to its pan-European platform while Deutsche Boerse has
recently signalled it is looking at expansion opportunities.
Neither immediately responded to requests for comment early
on Friday.
Italy views the Milan Exchange as a "strategic asset" but
several sources have said the governing 5-Star Movement is at
odds with the Treasury over the future of the
exchange.
Lawmakers of 5-Star urged Rome on Friday to take "every
initiative needed" to arrange a competitive bid for Borsa
Italiana. They recently crafted a proposal with the help of
Mediobanca to form a bidding consortium for Borsa which would
see Italy's biggest financial institutions teaming up with state
lender Cassa Depositi e Prestiti (CDP).
Italy has recently approved golden power legislation to
block takeovers of key companies in sectors including financial
infrastructure.
The London exchange said the U.S. Department of Justice has
closed its antitrust investigation into the Refinitiv deal
without seeking changes.
LSE reported on Friday that its first half profit rose 8% to
575 million pounds ($755 million), boosted by a strong showing
in its post-trade and FTSE Russell business.
($1 = 0.7613 pounds)
($1 = 0.8422 euros)
(Reporting by Huw Jones and Pamela Barbaglia;
Editing by Rachel Armstrong and Susan Fenton)
