Financial market data provider Interactive Data Corporation has agreed to acquire the assets of the market data division of Xcitek, as well as the market data assets of its affiliate Xcitax, for $25.3 million in cash. The transaction is expected to be completed within the next several weeks, contingent upon customary closing conditions.
The acquisition does not include XcitekSolutionsPlus (XSP), a software company affiliated with Xcitek, nor does it include Xcitek Consulting Services (XCS), both of which will continue to operate as independent entities. Marlin & Associates New York was the exclusive strategic and financial adviser to Xcitek.
Xcitek’s market data business, which is based in New York City, provides a range of North American corporate actions data, including reorganisation information, as well as valuable cost basis and class action data. Xcitek provides this content to over 2,000 financial institutions worldwide through a variety of delivery platforms including electronic datafeed services, proprietary web-based offerings and an extensive network of redistributors.
Interactive Data says the acquistion is an important part of its strategy to expand its reference data services and support enterprise-wide financial applications. It believes reference data content has become a mission-critical component used to ensure the timely processing of transactions, and help address regulatory and reporting requirements. It adds that Institutions are increasingly centralising data administration and using reference data content to support risk management and compliance applications.
The company believes the addition of Xcitek Market Data¹s corporate actions data covering North American securities will enhance the corporate actions content that Interactive Data Pricing and Reference Data collects, processes and delivers to financial institutions and redistribution partners. The firm also expects the Xcitek market data team to bring expertise and experience in helping Interactive Data¹s customers address challenging corporate actions issues across front, middle and back office environments.
“Interactive Data continues to see growing interest from institutional customers for reference data and related services, which are used in both departmental and enterprise-wide applications that span the front, middle and back office,” says Stuart Clark, president and chief executive officer of Interactive Data. “Corporate actions for equity and fixed income securities are a critical component of these services and the use of this content ranges from populating security master files, account statements and other workflow-intensive applications to supporting research activities and risk management applications.”
He adds, “With the addition of Xcitek Market Data, we believe we will be better positioned to directly collect and deliver a broader range of mission-critical content, address our customers’ emerging enterprise-wide content and application requirements, and to further advance our efforts to automate key data collection and delivery processes.”
Interactive Data has worked with Xcitek for many years, with each company redistributing select sets of each others’ data to clients. Upon completion of the transaction, these assets will be integrated into the Interactive Data Pricing and Reference Data business.
Xcitek’s market data business employs about 45 people and it is expected that the vast majority will join Interactive Data as employees following the acquisition.
“We have been a partner with Interactive Data for more than 20 years,” says Joe Carvalhido, chief executive officer of Xcitek. “During that period, we have come to know and respect Interactive Data and its products, people and culture. Going forward, we have every confidence that joining with Interactive Data is not only the right next step for our people, but also that, together, we can bring more opportunities, service and value to customers.”
Based on the unaudited financial statements provided to Interactive Data, Xcitek’s market data business generated 2006 revenue of approximately $9.0 million (net of $0.8 million generated from Interactive Data Corporation businesses) with operating expenses (net of $0.2 million in royalties payable to Interactive Data Corporation), including depreciation, of approximately $7.3 million. Assuming the transaction closes within the next several weeks, Interactive Data anticipates that the transaction will be cash flow positive but earnings neutral in 2007, and, through a combination of planned revenue growth and operational synergies, accretive to earnings in 2008.