Is it the government debt of a small former Eastern European country? No. Is it the total value of the European financial information business? Depends on who you ask, but that’s not what we’re thinking. Is it Mike Bloomberg’s 2009 dividend from the activities of his eponymous market data vendor business? Nah, too low.
No, $2.7 billion is the asking price for Interactive Data Corp. And it’s proving to be too rich for the remaining players in the game, we hear. Not only that, it’s twice what Standard & Poor’s, the last remaining trader contender, is willing to pay. While McGraw-Hill has overpaid in the past – muni broker JJ Kenny springs to mind – it apparently isn’t in the mood to do so right now.
As we’ve pointed out, an S&P acquisition would return Comstock to the fold. What we didn’t point out was that Interactive Data’s core pricing business was also spun out of S&P, where it was known as the Standard & Poor’s Price Tape & Punched Card Dividend Service, back around 1987. Clearly, $2.7 billion is a lot to pay to buy something back, even if it is a good fit; which it is.
This, some in the marketplace reckon, suggests that a private equity deal may win the day. And even then, the high price means that only Pearson’s 60% stake will change hands. The rest will stay where it is: with the investing public.
And what would a private equity player do with that 60%, one wonders? One theory is that it would be slowly sold into a burgeoning market, adding value as it goes. While that doesn’t sound a very glamorous outcome, the odds are that a deal will in fact be done. Pearson, it seems, is serious about getting out.
It would also entail Interactive Data’s standing on its own two feet – at least without the support of a trade parent – for the first time. After it bought the S&P pricing service, the company was sold by Chase bank back in 1989 to Dun & Bradstreet, where it remained until Pearson took its majority holding.