Up to a dozen suitors are expected to make an initial bid to acquire Interactive Data, a supplier of sub- millisecond data for algorithmic and electronic trading as well as other financial market data, according to industry executives contacted by Securities Industry News.
The deadline for the first round of offers is Friday, say parties close to Interactive Data Corp., founded in 1992.
These individuals say, though, that Interactive Data, which could bring a value of $3 billion, may even extend the deadline past Friday to accommodate all of the bidders. IDC is considered the No. 3 data provider behind Bloomberg and Thomson Reuters, which has been on the acquisition trail.
Goldman Sachs is handling the sale of Interactive Data, which is based in Boston.
Among those expected by securities analysts to be in the pool of contenders are Thomson Reuters, Bloomberg and McGraw-Hill Companies, parent of ratings and data vendor Standard & Poor’s. Private equity firms such as Kohlberg Kravis Roberts & Co.; The Blackstone Group; Bain Capital; Texas Pacific Group and Hellman & Friedman are also cited by analysts as potential suitors.
Among the information firms considered “strategic buyers,” Thomson Reuters is expected to offer the highest bid, the executives contacted contend.
Pearson, the British-based publisher of Penguin books and the Financial Times, owns a 61 percent stake in Interactive Data.
Pearson on Jan. 15 said that the board of Interactive Data was reviewing “strategic alternatives.” All of the bidders are expected to offer at least $1.6 billion for Pearson’s stake in the firm which would value IDC at about $3 billion.
Thomson Reuters, which declined to comment on its interest in Interactive Data, has just bought Aegisoft, a supplier of algorithmic trading software. Aegisoft’s Athena execution management platform gives Thomson Reuters a pre-trade risk management system. IDC would give it high-speed market data, to go along with this.
Buying Interactive Data also would allow Thomson Reuters, well-known for its sale of trading terminals, to diversify its revenue base to the licensing of financial information such as market data, corporate action notifications and reference data used in front-, middle- and back-offices. IDC has remained relatively immune to the economic crisis because unlike Bloomberg and Thomson Reuters its income doesn’t depend on the number of trading terminals.
IDC’s revenues rose 1.2 per cent to $563 million in the nine months ending September 30 of last year. Net income rose 5.5 per cent to $108 million. IDC said that it expects full-year 2009 revenue and operating income to be roughly the same in 2009 as in 2008.
In 2008, IDC posted operating income of $210 million on revenues of $751 million. IDC did not return calls seeking immediate comment.
This article can also be found at SecuritiesIndustry.com.
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