Verisk Analytics Inc. (Nasdaq: VRSK), a data analytics provider, has signed a definitive agreement to acquire Wood Mackenzie from private equity investment firm Hellman & Friedman and other Wood Mackenzie shareholders. Wood Mackenzie provides data analytics and commercial intelligence for the energy, chemicals, metals, and mining verticals.
The acquisition establishes Verisk as a data analytics provider in the global energy market, similar to its position in the property/casualty insurance industry. Based in Edinburgh, UK, Wood Mackenzie has a track record of more than 40 years providing objective analysis and advice on energy assets, companies, and markets, giving clients in more than 80 countries around the world the insight they need to make better asset investment and portfolio allocation decisions. Wood Mackenzie’s diverse customer base includes more 800+ international and national energy and metals companies, financial institutions, and governments. Wood Mackenzie works with strategy and policy makers, business development executives, market analysts, corporate finance professionals, risk teams, and investors.
The purchase price is £1.850 billion ($2.8 billion) to be paid in cash, subject to typical closing adjustments. Verisk intends to finance the transaction through a combination of about $2 billion in debt and up to $800 million in equity. Pro forma for the acquisition, Verisk expects to maintain its investment-grade debt ratings and intends to de-lever to approximately 2.5x Debt/EBITDA by the end of 2016.
For the year ended Dec. 31, 2014, Wood Mackenzie’s revenue and EBITDA were £227 million and £107 million, respectively, representing an EBITDA margin of 47.1%. The transaction is expected to be $0.08 to $0.10 accretive to adjusted EPS in the second half of 2015 based on a close date of June 30. Assuming a full year of 2015 Wood Mackenzie results, the transaction is expected to be $0.16-0.20 accretive for 2015. Both accretion estimates exclude transaction-related fees and adjust for transitional accounting items.
The transaction is expected to close during the second quarter of 2015, subject to the completion of customary closing conditions, including receipt of regulatory approvals. Stephen Halliday, Wood Mackenzie’s CEO, will continue to lead the business, reporting to Verisk president and CEO Scott Stephenson.
Morgan Stanley and BofA Merrill Lynch are acting as financial advisors to Verisk Analytics, and BofA Merrill Lynch and Morgan Stanley are acting as joint lead arrangers on a $2.9 billion bridge financing in support of the transaction. Davis Polk & Wardwell LLP is acting as legal advisor to Verisk Analytics in connection with the transaction. Deutsche Bank and Lazard acted as financial advisors to Wood Mackenzie. Freshfields Bruckhaus Deringer LLP advised the selling private equity funds affiliated with Hellman & Friedman LLC and Charterhouse Capital Partners LLP. Dickson Minto WS acted as legal advisor to the Wood Mackenzie management team.