LSE Acquistion of MillenniumIT; Smart Move

Mayank Mehta
16 Sep, 2009
New York City

LSE agreed to acquire Sri Lanka based MillenniumIT for $30 million as it lags the smaller and focused rivals to bridge technology gap. The Sri Lanka based group is well known for its exchange processing applications and may prove to be the smartest move by the LSE chief Rolet.

[R]8:00 PM London – LSE agreed to acquire Sri Lanka based MillenniumIT for $30 million as it lags the smaller and focused rivals to bridge technology gap. The Sri Lanka based group is well known for its exchange processing applications and may prove to be the smartest move by the LSE.[/R]

London Stock Exchange Group Plc increased 3.0% to 833 pence after it turned to the Indian subcontinent to help reduce its huge technology costs. LSE acquired Sri Lanka based MillenniumIT for $30 million (£18 million) that the exchange hopes will help it fend off nimbler rivals.

LSE plans to pay 73% in cash and the rest in 600,000 newly issued stocks.

The company spokesperson confirmed that the new trading platform will help LSE to lower trading speed from 2.7 milliseconds to below one millisecond as it replaces its TradeElect, Infolect and other trading platforms beginning 2010.

MillenniumIT chief Tony Weerasinghe will report directly to London Stock Exchange chief Xavier Rolet.

LSE hopes to save £10 million a year through the acquisition.

Borse Dubai and Qatar Investment Authority control 35% of LSE and only ten years ago Dubai based stock exchange will not entertain hiring MillenniumIT to modernize their operations.

Since then MillenniumIT built its reputation by providing programming services to exchanges in the U.S. and selling its various high performance low cost trading trading applications to exchanges in Asia and Africa.

The deal has already received approval from 90% of shareholders and is expected to be completed by mid-October.

The acquisition will solve two problems faced by LSE. The exchange has been a consistent laggard as new rivals pop with better and faster tools to complete and process rapid fire trades and provide trained staff that will serve as in-house outsourcing partner.

Applications developed by MillenniumIT may be useful to various exchanges including Milan Exchange and Johannesburg Stock Exchange and meet the needs of active traders in London.

MillenniumIT operates a large technology campus near Colombo, Sri Lanka and has offices In Boston and New Jersey.