About a-team Marketing Services
The knowledge platform for the financial technology industry
The knowledge platform for the financial technology industry

A-Team Insight Blogs

Interactive Data Confirms is Exploring “Strategic Alternatives”, But Who is Big Enough to Buy it?

Subscribe to our newsletter

Interactive Data has confirmed today that it is exploring “strategic alternatives” for its future, but has declined to provide any more explanation as to what these alternatives may include. The number three data provider in the financial markets is likely seeking a suitable marriage partner, but who is likely (or able) to offer its hand?

Interactive Data has performed relatively well during the market downturn and worked hard to earn its place as the number three data provider, after mega corporations Thomson Reuters and Bloomberg, but it seems that Pearson, which owns a majority stake in the business, is reviewing whether to sell up and exit the financial services business. Pearson owns a 61% stake in Interactive Data, which is valued at US$2.4 billion and was acquired back in 2000. The publishing giant seems keen to get away from the financial services market in general and is also rumoured to be in talks to sell the Financial Times, potentially to Bloomberg.

The option for the sale of Interactive Data has also long been in the background but was deemed unlikely to happen under the stewardship of Interactive Data veteran CEO Stuart Clark. Clark, however, was replaced by ex-president of sales and marketing for the vendor, Raymond D’Arcy, last year and it seems the new management is much more open to the idea.

But who is in a position to buy the business? If the rumours about the FT are indeed true, Bloomberg may be in the frame, but given its previous reticence to purchase large organisations, this seems unlikely. It may also face anti-trust issues (a significant problem for vendors of its size) and this issue would also likely affect rival Thomson Reuters. Moreover, given that Thomson Reuters is still in the throes of a merger, engaging in another may prove to be a bridge too far.

This puts Standard & Poor’s into the frame. It has a reasonably compatible set of businesses; Lou Ecclestone’s FIRMS business line in particular would sit particularly nicely alongside the Interactive Data pricing and valuations offering. It is also likely to be more of a culturally appropriate fit for the data vendor than one such as Bloomberg, which has not traditionally been focused on the back office space.

Of course, there’s always the private equity option and it seems likely that Interactive Data’s relatively robust performance over the recession period will have caught the eye of the private equity world. Interactive Data’s revenue rose by 1.2% to US$563 million in the nine months to September 30 last year. This stability in times of stress will make it an attractive, if expensive, proposition.

For now, we’ll have to wait and see what transpires. According to a spokesman for Pearson: “Pearson and Interactive Data can give no assurance on the potential outcome or timing of this review process, and do not intend to make any further statements unless and until it becomes appropriate to do so”.

Subscribe to our newsletter

Related content

WEBINAR

Recorded Webinar: How to gain operational efficiency in corporate actions processing

While the risk associated with corporate actions is well established, many financial institutions continue with manual processing in the back office. More often than not, corporate actions information is manually keyed in and event processing lacks automation. This results in operational inefficiency, and financial risk due to missed events or simply getting it wrong. These...

BLOG

Beyond Licence Fees: Key Considerations for Lowering TCO in Financial Data Management

By Neil Sandle, Chief Product Officer, Alveo. New technologies can significantly reduce the total cost of ownership (TCO) for financial data management platforms, with considerations going beyond the vendor licence fee and encompassing the full scope of TCO. Understanding your data management TCO requires evaluating key factors with solution providers, including the technology stack’s quality,...

EVENT

Buy AND Build: The Future of Capital Markets Technology, London

Buy AND Build: The Future of Capital Markets Technology London on September 19th at Marriott Hotel Canary Wharf London examines the latest changes and innovations in trading technology and explores how technology is being deployed to create an edge in sell side and buy side capital markets financial institutions.

GUIDE

Risk & Compliance

The current financial climate has meant that risk management and compliance requirements are never far from the minds of the boards of financial institutions. In order to meet the slew of regulations on the horizon, firms are being compelled to invest in their systems in order to cope with the new requirements. Data management is...