Intercontinental Exchange Group (ICE) is back on the acquisition trail and building its valuations business with a definitive agreement to acquire Standard & Poor’s Securities Evaluations and Credit Market Analysis (CMA) from McGraw Hill Financial. The agreement follows the group’s December 2015 acquisition of Interactive Data, which holds a significant stake in the evaluated pricing market.
Beyond data services, ICE hasn’t ruled out extending its exchange business, saying it is considering making an offer for the London Stock Exchange (LSE), which could scupper merger talks between the LSE and Deutsche Börse.
ICE’s agreement to acquire S&P’s Securities Evaluations and CMA, which operate within McGraw Hill’s S&P Global Market Intelligence business, marks not only a step up for ICE in the valuations space, but also the first divestments made by McGraw Hill since it acquired SNL Financial in September 2015, merged it with S&P Capital IQ, rebranded the business to S&P Global Market Intelligence and put in a management team led by former CEO of SNL Financial, Mike Chinn.
The ICE acquisition of S&P Securities Evaluations, a provider of fixed income evaluated pricing, and CMA, a provider of independent OTC data that was acquired by S&P Capital IQ in 2012, is in line with the group’s stated strategy of offering more data and valuation services to its customers. It also brings ICE into closer competition with valuations leaders Bloomberg and Thomson Reuters.
Commenting on the acquisition, ICE chairman and CEO Jeffrey Sprecher says: “With rising demand for independent data in the global fixed income and credit markets, this transaction will support the need for innovation and increased risk management and valuation services. We look forward to serving customers in these markets as they become more transparent, and as pricing becomes more accessible.”
Under the terms of the acquisition agreement, which is subject to regulatory approval, ICE can elect to pay the price of the McGraw Hill businesses at the close of the transaction in either cash or shares of its common stock.
For S&P Global Market Intelligence, the sale of S&P Securities Evaluations and CMA is the end of an era in the valuations market and leaves the company with business divisions offering market and financial data, sector intelligence, solutions and delivery platforms.
Explaining the sale, Chinn says: “After a strategic review of our portfolio, we determined that we do not have critical mass in the area of securities pricing. Therefore, this choice is the right decision for McGraw Hill Financial and S&P Global Market Intelligence. ICE is positioned to expand coverage in derivatives and offer a multi-asset class, comprehensive source for pricing and reference data, so clients of S&P’s Securities Evaluations and CMA will benefit as well.”