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UPDATE 2-ICE to buy market data firm Interactive Data in $5.2 bln deal

Published 2015-10-26, 12:44 p/m
UPDATE 2-ICE to buy market data firm Interactive Data in $5.2 bln deal
TRI
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(Adds analyst comment, details; updates shares)
Oct 26 (Reuters) - Intercontinental Exchange Inc ICE.N
said on Monday it would buy financial data firm Interactive
Data Corp (IDC) from investment firms Silver Lake and Warburg
Pincus LLC in a deal valued at about $5.2 billion.
ICE said the deal, which includes $3.65 billion in cash and
$1.55 billion in ICE stock, will help build on ICE's market data
business by adding technology platforms and increasing new data
and valuation services.
ICE, valued at about $27.5 billion, said the deal to buy
IDC, which provides financial data to banks, money managers and
hedge funds, was approved by the boards of both companies.
The exchange operator said it expected cost synergies of
$150 million, which will be largely completed within three
years. The deal is expected to close at the end of this year.
ICE's shares were down 2 percent at $243.78 midday on
Monday, reversing gains after touching a record high of $254.50
in early trading.
CLSA analyst Robert Rutschow flagged IDC's comparatively low
margins as a concern.
IDC's EBITDA margin is 35-40 percent, which isn't as high as
other data businesses and compares with ICE's existing data
business' margin of above 75 percent, Rutschow wrote in a note.
The $150 million cost savings would push margins up to 55
percent, but that would still be below the margins at ICE's
other market data unit, Rutschow said.
ICE's data business currently spans nine asset classes
across the 11 exchanges and seven clearing houses it operates,
including the NYSE Group and ICE Futures exchanges.
Bedford, Massachusetts-based IDC competes with companies
including Thomson Reuters Corp TRI.TO and Bloomberg LP in
providing pricing and data services to financial institutions.

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