Intercontinental Exchange Group Expands Data Segment With $5.2 Billion IDC Acquisition
Intercontinental Exchange Group (NYSE:ICE) recently announced that it has entered into a definitive agreement to acquire financial market data provider and analytics firm Interactive Data Corporation (IDC) for $5.2 billion. [1] Besides ICE, bids were reportedly submitted by Markit and NASDAQ OMX Group (NASDAQ:NDAQ) for the acquisition. [2].
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Highlights Of The Deal
IDC was previously owned by private equity firms Silver Lake Partners and Warburg Pincus. It serves mutual funds, banks, asset management companies, hedge funds, securities and financial instrument processing and administration sectors. ICE aims to expand its data services with the IDC acquisition. ICE’s shares rose as much as 2.3% to touch a record high of $255 following the announcement. The transaction is expected to close by the end of the year, subject to regulatory approval. With the IDC business, ICE could realize expense synergies of about $150 million within three years of closing the deal. Moreover, the company expects adjusted earnings accretion of around 5% of current EPS excluding deal-related amortization within one year post-closing. [3]
IDC To Boost ICE’s Data Service Revenues
According to consulting firm Burton-Taylor, this purchase would make ICE the third largest data provider after Bloomberg and Reuters, in an industry valued at $26.5 billion in 2014 [4]. IDC’s recurring revenue – excluding one-time hardware sales, set-up and implementation fees – constituted 98% of total revenue from 2011 to 2014, a factor which made it an appealing acquisition target. Moreover, IDC will help offer ICE more growth opportunities by leveraging its complementary platforms for trading, clearing and data. ICE may also look at launching its own trading platform for the fixed income category and eventually profit from its existing base of clients and other emerging trading venues. IDC’s full year revenues are expected to be around $945 million for 2015.
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- Intercontinental Exchange Sets October 28 for Third Quarter 2015 Earnings Announcement and to Review IDC Transaction Details, ICE Press Release, October 2015 [↩]
- ICE to Buy IDC for $5.2 billion, Wall Street Journal, October 2015 [↩]
- Intercontinental Exchange to Acquire Interactive Data Corporation from Silver Lake and Warburg Pincus in $5.2 Billion Cash and Stock Transaction, Interactive Data Corporation Press Release, October 2015 [↩]
- Demand For Financial Market Data, Burton-Taylor, March 2015 [↩]