I Now Pronounce You Merged!
I'll admit, I sometimes get a little teary-eyed at weddings. There's something particularly moving about watching a happy couple exchange vows and prepare for a long future together. So you can imagine how excited I was at a sudden uptick in M&A activity this past week-especially since the deals weren't of the multi-billion dollar, anti-competitive type that prompts regulators to speak now or forever hold their peace.
This week alone, European multilateral trading facility Chi-X tied the knot with data technology provider Cicada, while Swedish news provider Direkt divorced Swedish electronic publishing house Bisnode to elope with Norwegian data vendor Infront, and Interactive Data remarried the NTT Data Financial Corp. subsidiary of Japan's NTT data, the two having previously divorced in the 1990s.
Chi-X's purchase of Cicada gives the market operator a second, established technology platform at its fingertips, in addition to its current trading and data engine, to sell to other markets. However, it's unclear how the deal will impact clients that are also competitors-for example, Nasdaq OMX Europe also uses Cicada's technology for some key components of its MTF platform. How comfortable will Nasdaq OMX Europe feel about a core part of its proposition being controlled by a direct competitor?
Buying Direkt strengthens Infront's offering with news and estimates data, although one of the main drivers of the deal appears to have been both vendors' desire to prevent Direkt being picked off by un-named third parties that officials imply may have led to less competition in the Nordic news space. So, a win-win situation?
Meanwhile, Interactive Data is buying back its former Japanese subsidiary from NTT Data, in order to support a more targeted push into the country. Though notoriously protective of domestic vendors, Interactive Data Asia Pacific managing director Jim Farrer says the country has opened up to global vendors as it has opened up to global investment strategies, making now the perfect time for Interactive to redouble its efforts in Japan to grab a share of that market. Importantly, though, by buying an established domestic vendor, Interactive neatly sidesteps any problems associated with breaking into a new market as a foreign vendor.
You can, of course, find more details on all these stories in this issue of Inside Market Data.
So why all the sudden activity? Each of these has a specific strategy behind it. But also, with no end in sight to the world's economic woes, while some firms are putting off deals and projects until such time when greater market certainty returns, others may simply be deciding to act now on the basis that tomorrow could bring even greater uncertainty.
Michael Maxworthy, partner at Marlin & Associates, an investment banking and advisory firm that specializes in brokering deals between technology and data vendors, describes the current climate as "an interesting time" for mergers and acquisitions.
"It is plainly evident that parts of the M&A market have been seriously impacted by the current financial and economic turbulence-particularly larger deals that rely on debt leverage," Maxworthy says, though he adds that "the market certainly is not dead, and deals are getting done. In fact, we still see keen interest from sellers who are ready to exit, and from buyers with cash looking for firms that lead their niche and have managed to continue growing through this cycle."
Or maybe everyone's just desperate to get nominated for the "Acquisition of the Year" category in next year's IMD Awards?