Verisk Analytics Inc., a supplier of data to insurers and banks, agreed to buy Wood Mackenzie from Hellman & Friedman LLC and other shareholders for about 1.85 billion pounds ($2.8 billion) in cash, gaining a business providing information to the energy, chemicals and mining industries.
The buyer plans to finance the purchase with $2 billion of debt and by issuing as much as $800 million in equity, the companies said in a statement Tuesday. The deal for Edinburgh- based Wood Mackenzie is expected to be completed in the second quarter, subject to regulatory approval, the companies said.
Verisk, formed in 1971 as an association of property- casualty insurers to gather industry data, has been expanding through acquisitions since its 2009 initial public offering to provide information to credit-card and health companies. Chief Executive Officer Scott Stephenson has been pushing the Jersey City, New Jersey-based company to grow beyond the U.S. and enter new lines of business.
“Wood Mac could leverage Verisk’s property-information, aerial-imagery and weather-climate capabilities and help build out its supply chain solutions,” Jeffrey P. Meuler, an analyst at Robert W. Baird & Co., said in a March 2 note.
Wood Mackenzie provides research and consulting and has offices in locations including Beijing, London, Dubai, Calgary, Houston, New York and Moscow, according to its website. The company reported 2014 revenue of 227 million pounds and earnings before interest, taxes, depreciation and amortization of 107 million pounds.
The deal is Verisk’s biggest since acquiring Argus Information & Advisory Services LLC for $425 million in 2012 to gather data from credit-card issuers and retail banks and benefit from the growth of the payments market, according to data compiled by Bloomberg. Stephenson favors businesses that gain from scale as he assembles databases that can be sold to subscribers. He said Verisk can raise prices on the anniversary of contracts and sell additional services to its clients.
“This model is very similar to that of Argus,” Stephenson said of Wood Mac on a conference call. “Build it once, sell it many times.”
Verisk slipped 0.5 percent to $70.98 at 9:48 a.m. in New York, after jumping more than 11 percent this year through Monday. Wood Mackenzie CEO Stephen Halliday will continue to lead the business, reporting to Stephenson.
Morgan Stanley and Bank of America Corp. advised Verisk and are acting as joint lead arrangers on $2.9 billion of bridge financing. Verisk said it doesn’t expect to need to use that facility. Davis Polk & Wardwell LLP is the company’s law firm on the deal.
Deutsche Bank AG and Lazard Ltd. are Wood Mackenzie’s bankers, while Dickson Minto WS was legal adviser.
Freshfields Bruckhaus Deringer LLP advised the selling private equity funds affiliated with Hellman & Friedman and Charterhouse Capital Partners LLP. Hellman & Friedman acquired a 63 percent stake in the Edinburgh-based company in a 2012 deal that valued it at 1.1 billion pounds.
Verisk had planned a $650 million takeover of EagleView Technology Corp. Stephenson scrapped the deal in December after antitrust regulators said the purchase would give Verisk too large a share in the market for aerial images used by insurers. The company said at the time that it would instead repurchase $500 million of shares.
McGraw Hill Financial Inc., the parent of Standard & Poor’s, was among bidders for Wood Mackenzie, the Financial Times said on Feb. 28, citing people familiar with the talks.
“Had we not acted now, acquiring Wood Mac would be more expensive, or perhaps impossible, in the future,” Stephenson said. He said prospect of competitive bidding or a potential Wood Mac initial public offering spurred Verisk’s offer, even as a plunge in oil prices rattled the energy industry.
--With assistance from Kenneth Wong in Berlin and Doni Bloomfield and Jing Cao in New York.