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ICE digs deep for data: IDC acquired for $5.2 billion as IPO investors demand discounts

October 26, 2015
IDC

Interactive Data Holdings, which provides financial institutions with market data and services, announced on Monday that it would be acquired by Intercontinental Exchange (NYSE: ICE) for $5.2 billion, including $2.2 billion in net debt. Interactive Data (IDC) filed for an IPO on October 9, 2015, but had reportedly been pursuing a dual track process since June.

The $5.2 billion buyout price ($3.65 billion cash; $1.55 billion in stock). Intercontinental Exchange had been bidding for IDC against Markit (Nasdaq: MRKT) and Nasdaq OMX Group (Nasdaq: NDAQ). Markit went public in June 2014 and now trades 27% above its offer price. ICE traded down 1% intraday on Monday, but its stock is up about 5% in the past month. IDC was owned by Silver Lake and Warburg Pincus, which took the company private in July 2010 for $3.4 billion.

LBOs find resistance in IPO market
IDC had reportedly planned to move forward with its IPO until KKR's highly-leveraged merchant acquirer First Data (FDC) was forced to slash its valuation to a significant discount to peers, before breaking issue on the first day. Caribbean wireless provider Digicel (DCEL) and Cerberus-backed grocery chain Albertsons (ABS), which had a high amount of debt, both postponed October IPOs. Since the beginning of September, 16 IPOs (76%) have priced below the original range, and half traded down or flat on the first day.

Other LBOs in the pipeline include Laureate Education (LAUR), Acelity Holdings (ACEL.RC), Neiman Marcus (NMG; reportedly pushed back to 2016), Univision (UVN), Patheon (PTHN), McGraw-Hill Education (MHED) and Petco (PETC.RC).

Recent dual-track acquisitions
A number of 2015 IPO candidates backed by private equity have instead opted for a sale. In August, PE-backed financial software provider SunGard (SDS.RC) was acquired by Fidelity National Information Services (NYSE: FIS) for $9.1 billion. Earlier this month, CD&R-backed sterile preparation provider PharMEDium (PMHC) wasacquired by AmerisourceBergen (NYSE: ABC) for $2.6 billion.

Business
Interactive Data Holdings is a global provider of financial market data and analytics to financial institutions and software and service providers. It competes with Bloomberg, Thomson Reuters, Markit, S&P Capital IQ and FactSet.

The Bedford, MA-based company, which was founded in 1968 and booked $940 million in sales for the 12 months ended June 30, 2015, plans to list on the NYSE under the symbol IDC. Morgan Stanley, Barclays, BofA Merrill Lynch, UBS Investment Bank, Citi, Credit Suisse, Deutsche Bank, Evercore Partners, Goldman Sachs and Wells Fargo Securities are the joint bookrunners on the deal. No pricing terms were disclosed.