McGraw Hill Financial (NYSE: MHFI) has agreed to buy SNL Financial LC for 2.2 billion in cash in an effort to expand data services for the owner of the S&P ratings services. SNL provides data, commentary, and services for banking, real estate, energy, and other sectors. McGraw Hill said SNL will be a great fit with S&P Capital IQ’s current platforms in banking and insurance.
“We are enthusiastic about SNL because it is a fast-growing, highly complementary subscription-based business that will enable us to accelerate our strategy to be the leading provider of transparent and independent benchmarks, analytics, data and research across the global capital, commodity and corporate markets,” said McGraw Hill Chief Executive Douglas L. Peterson in a news release.
This deal should go through during the third quarter. Financial-data firms have been valued higher as of late now that hedge funds and brokers are using more data-driven approaches to trading. Shares of McGraw Hill are up 125% over the past three years. McGraw Hill has tax benefits of around $550 million dollars, which should help cushion the impact of the deal for them. They also expect to add to its adjusted earnings in 2016 along with $70 million in synergies to be achieved by 2019.
This sector is rapidly expanding and there are other anticipated transactions now that First Data Corp. and SunGard recently filed for IPOs. The Wall Street Journal has also reported that SunGard has been generating interest in acquisition.