Telekurs’ agreement this month to acquire its former redistributor in France, Fininfo SA, may signal a new willingness on the part of the big Swiss reference and market data vendor to explore avenues for non-organic growth after decades of shunning acquisitive ventures. The €217.7 Million purchase seems to be a good fit, with Fininfo more closely resembling Telekurs Financial in terms of its business lines than any other European data vendor.
“The motivation for Telekurs Financial was based on the same analysis of the market as Fininfo,” says Marc Carletti, chief executive officer of Telekurs Financial. “We have the same specialities and are confronted by the same challenges.” Carletti cites several positive aspects of the deal, including opportunities in the reference data business in France and the ability to “strengthen in one go our positioning in Europe.”
Simply put, the Fininfo transaction yields a parallel set of information services to Telekurs’ and a complementary geographic combination. With Fininfo also enjoying, like Telekurs, national numbering agency (NNA) status on its home turf, the acquisition also lends credence to Telekurs Financial’s recent strategy of data origination to complement its activities as data consolidator and distributor. This strategy has seen the recent release of a fair value pricing service for bonds.
This willingness to embrace development of proprietary data services and to seek out possible acquisitions to fill gaps in the overall product line appears to be the result of a change in focus among senior Telekurs Financial over the past two years. This change may have gained momentum via the recent move to merge Telekurs with fellow Swiss entities Swiss Exchange SWX and SIS.
The agreement involves all companies from Fininfo’s financial information business, with the exception of Idé, a subsidiary company specializing in graphic design, and Anthium, a bond-trading company that recently ceased activities. Telekurs is proposing €16.60 per Fininfo share (after a dividend distribution of €0.40 a share for 2006 fiscal year).
Carletti says he sees the Fininfo acquisition as an opportunity for the Swiss data vendor to “gain critical” in its core markets. With Fininfo fully integrated, the deal will place Telekurs Financial among the market-leading data vendors in Switzerland, Germany, France, Belgium, Spain and Scandinavia, where Fininfo has significant market penetration, chiefly through its recent acquisition of the SIX/Ecovision information business.
Carletti cites in particular the strong position that Fininfo has developed in France in terms of reference data. “They are the numbering agency for France and Telekurs Financial in this case is not,” he says.
“So, there is an interesting match. Fininfo is definitely going to be able to bring some value-added data that will enhance the combined database offering. And, it’s clearly one focus for us.”
Another focus area is fund data, where Carletti says that plans are in the pipe for expansion. Fininfo’s Europerformance unit offers a database of fund data combined with specific analytic tools and rating applications for funds.
“Fininfo started very promisingly with this strategy in France,” says Carletti. “Obviously, here the wish is to further analyse this part of the business and see how we can expand it globally … because fund (data) is already part of the growth strategy of Telekurs Financial.”
“For us, it’s a possibility to gain an interesting critical mass, that today is extremely important and a consequence generally the consolidation trends that we are observing in the market,” Carletti says. “Telekurs will certainly be able to strengthen our position in countries like France, Scandinavia and southern Europe with territories like Spain.”
Telekurs Financial is “absolutely not present” in Scandinavia, Carletti says. By virtue of its acquisition of SIX/Ecovision in the second half of last year, Fininfo reckons it is ranked second in the Scandinavian marketplace. Fininfo’s strength in Spain, meanwhile, also provides a stepping stone into the Portuguese and Latin American markets.
Carletti points to further possible leverage in Benelux. Here, he says, both Fininfo and Telekurs are known specialist information providers in the back office area. Fininfo, through the Nextinfo business it acquired in May from Euronext Brussels, “has a strong foothold in Belgium … whereas we have a strong one in Luxembourg. In this respect, we are definitely going to get leverage from Nextinfo.”
For Fininfo, the timing of the deal might just be right. The company’s share price has been sliding gradually since 2003, and, according its 2006 revenues dropped to €137.8 million from €141.2 million a year earlier, with operating profit halving to €11.1 million and net income falling to just €4.6 million from €12.6 million. Data distribution revenues totalled €41.4 million.
Fininfo generates 17.2% of its revenues from outside of France. Telekurs’ stated ‘Go for Growth’ strategy is aimed at gaining further market share abroad. Telekurs Financial generates more than 40% of its revenues outside of Switzerland.
In terms of revenue, the combined entity would be split by a ratio of 55% on the Telekurs side and 45% Fininfo side. Telekurs Financial has a total staff of over 660 employees and achieved revenues of SFr243.1 million (€146.44 million) in 2006, while Fininfo’s headcount was 965 last year on group turnover of €137.8 million. Carletti says that Telekurs won’t embark on any integration activities until the closing phase has been completed in September or October.
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