After much debate about the future of data vendor Interactive Data, it has emerged that Intercontinental Exchange has bought the company from its private equity backers for $5.2 billion. The backers Silver Lake and Warburg Pincus originally purchased the company for $3.4 billion in 2010.
The deal ends over a year of speculation about when the current investors might want an exit in order to realise the return on their investment. The company has been exploring sale options for some time. And earlier in the year it had also explored the possibility of an IPO.
Now Interactive Data’s core data services for across the enterprise – ranging from low latency, direct and consolidated feeds, to valuations and reference data – will join the growing roster of companies that form part of the ambitious Intercontinental Exchange.
ICE already operates 11 exchanges, including the New York Stock Exchange, and ICE Futures exchanges, and seven clearing houses. This acquisition is part of its plan to build on its global market data growth strategy by “expanding the markets served, adding technology platforms and increasing new data and valuation services”. Last year the company bought SuperDerivatives, which provides cloud-based market data, derivatives trading technology and analytics, as well as valuations and market data.
Stephen Daffron, Chief Executive Officer of IDC says, “With ICE, we have the long-term capital, strategic support and collective set of relationships to further grow our company and evolve our platform in the rapidly-changing capital markets landscape.”
Interactive Data has spent a solid few years re-engineering its back-end technology in order to be able to deliver a more cohesive solution and manage its own internal resources better. This was driven in part by cost cutting measures. The new owner has already suggested expense synergies of $150 million to be “largely completed by year three after closing.
It has seen many of its original and well-known staff leave the company particularly in recent months amid much uncertainty. We’re keen to see how ICE will now shape the future of the business we’ve enjoyed tracking for many years.
Interactive Data shareholders will receive consideration of $3.65 billion in cash and $1.55 billion in Intercontinental Exchange common shares. The deal is expected to close by year end. Interactive Data’s revenues in 2014 were $939 million. The release states that adjusted EBITDA is expected to be $378 million.