McGraw-Hill Financial acquires SNL Financial in $2.2 billion deal
Former publishing giant had previously divested both its education publishing division and its construction division in separate deals to focus exclusively on the financial sector
The owner of Standard & Poor’s and J.D. Power and Associates, McGraw-Hill Financial, today announced a $2.2 billion deal to acquire SNL Financial, a company that provides data and services for banking, real estate, energy and other industries. The deal cash deal was made possible by McGraw-Hill’s recent sales of assets outside the financial industry.
McGraw-Hill accelerated its divestments in November 2012 when it sold its education division to Apollo Global Management for $2.5 billion. A few months later the company formally changed its name from The McGraw-Hill Companies to McGraw-Hill Financial (The company for a long time had been known as McGraw-Hill Publishing Company.) In September of last year the company divested its subsidiary McGraw-Hill Construction to Symphony Technology Group for $320 million – that sale included the B2B magazine titles Engineering News-Record and Architectural Record, which the PE firm was not really interested in and eventually sold off to BNP Media.
When I joined McGraw-Hill in late 1991, the company still felt very much like a publishing company, but its heart was already in the financial services sector.
Here is McGraw-Hill Financial’s acquisition announcement:
NEW YORK, NY – July 27, 2015 — McGraw Hill Financial today announced that it has signed a definitive agreement to acquire SNL Financial for approximately $2.225 billion in cash. The economic impact to McGraw Hill Financial will be partially offset by tax benefits with an estimated present value of approximately $550 million resulting from the transaction. SNL is privately held by an affiliate of New Mountain Capital LLC and current and former members of SNL management.
SNL’s deep product experience and rich sets of data, analytics and research in areas such as real estate and media strongly complement S&P Capital IQ’s platform in the areas of banking and insurance. SNL also adds new analytics and capabilities that expand the Platts platform across energy markets.
“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 Douglas L. Peterson, President and CEO of McGraw Hill Financial. “This transaction provides unique opportunities to provide our customers with end-to-end data solutions and to develop exciting new services, enhance existing offerings and expand into attractive adjacent markets. Adding SNL to our portfolio creates a high-growth market data and analytics business that will leverage the power of the S&P Capital IQ and Platts global platforms to realize the full potential of SNL’s financial and commodities products.”
Excluding amortization, the transaction is expected to be accretive to adjusted diluted EPS in 2016, and, on a GAAP basis, in 2018. The Company has also identified approximately $70 million in synergies which are expected to be fully realized by 2019 largely from operational efficiencies and McGraw Hill Financial’s ability to accelerate SNL’s international growth through its global footprint.
Mr. Peterson added, “SNL has a stellar management team that has sustained an impressive organic growth rate in the low to mid-teens for more than a decade and which has recently completed a strategic investment program designed to enhance profitability. This acquisition provides an excellent opportunity to use our balance sheet to accelerate growth while preserving our investment-grade credit rating and the financial flexibility to continue making investments in our business while returning capital to shareholders.”
“This is an exciting day for our clients, employees and shareholders and a true milestone event in our 28 year history,” said Mike Chinn, President and CEO of SNL Financial. “New Mountain Capital has been a tremendous partner for us over the last four years. The team there provided excellent guidance and supported numerous growth initiatives that enabled us to double our revenues over that period. We believe McGraw Hill Financial, Doug Peterson and his leadership team are ideal partners as we relentlessly pursue our mission of providing the highest quality sector-specific data, news and analytics to our clients. We’re thrilled to continue this journey with the McGraw Hill Financial team and join their portfolio of market-leading brands.”
Following the closing of the transaction, Mr. Chinn will report to Mr. Peterson.
Peter Masucci, Chairman of the Board of SNL Financial and Managing Director of New Mountain Capital, stated, “We’re fortunate to have had the opportunity to partner with such a special company and its outstanding management team. We are confident that SNL is well-positioned to continue its strong growth as an integral part of McGraw Hill Financial and wish Mike Chinn, Doug Peterson, and their management teams great success.”
Financing and Closing Conditions
McGraw Hill Financial is expected to fund the transaction with approximately $525 million in cash and $1.7 billion in new debt.
The transaction is expected to close in the third quarter of 2015, subject to regulatory approvals and customary closing conditions.
Evercore and Goldman Sachs acted as financial advisors and Wachtell, Lipton, Rosen & Katz and Clifford Chance LLP acted as legal advisors to McGraw Hill Financial.