Reuters has agreed to acquire Multex.com, the financial information provider, for $7.35 (4.56) per share in cash, or $195 million in total.
Based in New York, Multex offers comprehensive financial information on over 25,000 active companies worldwide and earnings estimate data on over 16,000 companies in 60 countries. It reported 2002 revenue of $92.4 million (57.4 million), EBITDA of $11.5 million (7.1 million) and a net loss of $7.4 million (4.6 million), in accordance with US GAAP. The acquisition covers net assets with a book value at 31 December 2002 of $109.0 million (68.0 million), including $50.6 million (31.0 million) of cash.
Reuters currently owns 6% (1.94 million) of Multex’s 32.5 million outstanding shares. Senior management of Multex, who own approximately 5% of Multex not including options, have committed to support the deal by tendering their shares.
Under the agreement, Reuters will begin a tender offer within the next few days for all outstanding shares of Multex. The tender offer will be followed by a merger in which all remaining Multex shareholders will receive the same per share price. Net of Multex’s estimated cash and the 6% interest already held by Reuters, and taking account of transaction expenses, the cash cost to Reuters will be approximately $195.0 million (121.0 million).
The acquisition agreement has been approved by the boards of directors of both companies and is subject to customary conditions, including standard regulatory approvals.
Reuters says Multex possesses significant content assets, access to the research community and market experience that are expected to bring substantial benefits to the company and its customers.” It strengthens the Group’s financial information products with the addition of deeper global company information and estimates as well as global research content,” says the buyer.
“Reuters will combine these assets with its own to offer the producers and consumers of investment research innovative, cost-effective solutions. Outside of the professional financial markets, Reuters will use these assets to create segmented online financial news, data and research products for retail consumers as well as corporate and media customers.”
Tom Glocer, Reuters Group Chief Executive, said: “Multex will play an important part in “Fast Forward,” our drive to become a more competitive, focused and profitable information company. We know this company well. It offers compelling information and products that are valued by financial professionals and consumers alike. At a time of structural change in the financial markets, its investment research assets and relationships are particularly attractive. “We plan a quick and full integration that we expect to yield cost savings within both organisations and that will enable us to take Multex’s business to scale with the help of Reuters global distribution infrastructure. Multex and its talented staff will add lasting value to Reuters.”
Isaak Karaev, Chairman and Chief Executive Officer of Multex, said: “Our dedicated employees have worked extremely hard to make our company such a success, and I am very excited by the possibilities of the combined organisation. Since our inception, Multex has developed outstanding products and has established solid relationships with our clients and partners.
During these years, we enjoyed an excellent working relationship with Reuters across both our institutional and retail products and are familiar with each other’s business. Reuters leading brand, scale, and market reach are exceptionally valuable assets that will allow us to deepen our penetration into the markets we each serve. I look forward to fully integrating our products and relationships with Reuters. Together, we will enhance our competitive position, open up areas for growth, and maximise our ability to offer high value products to our clients.”
Karaev will become President of Reuters Investment Banking and Brokerage segment after the acquisition closes.
The offer requires that sufficient shares be tendered for Reuters to obtain at least a majority of Multex’s fully diluted shares when added to the 6% interest it already holds. Subject to satisfaction of its conditions, the tender offer is expected to be completed by the end of March. Following the subsequent merger, Multex will become a wholly-owned subsidiary of Reuters.
Under UK GAAP, Reuters expects the acquisition to reduce normalised profit before tax by approximately 10.0 million ($16.0 million) in 2003 as a result of integration and financing costs. The acquisition is expected to have a positive impact thereafter.
Founded in 1993, Multex is a provider of global broker and independent research, consensus and detailed analyst estimates, and comprehensive fundamental and business information on more than 25,000 active companies worldwide.