IDC Purchase Targets Institutions
IDC Purchase Targets Institutions
Securities Industry News
Volume 15, Number 3
Tuesday, January 21, 2003
by Mary Schroeder
IDC has several thousand customers, “and we know that many of them have a need for real-time content,” Clark said. More than 80 percent of IDC's revenue comes from the institutional marketplace, he added.
IDC will also use the Comstock infrastructure and data to support other areas of the business, Clark said.
Dan Connell, president of the unit, and his management team will continue to run the business under IDC's ownership, Clark said. Comstock, which has annual revenue in the range of $60 million, competes with Reuters, Telekurs, HyperFeed and SunGard in the real-time datafeed space, he said.
Observers said S&P likely felt that Comstock-which suffered with the dot-com crash-didn't fit with the rest of its business. “Their emphasis is on the ratings business and things they see as close to that, and I guess they didn't see Comstock as close to that,” said Clark. In a statement, Leo O'Neill, president of S&P, said “this divestiture will allow us to bring even greater focus for Standard & Poor's Investment Services group, which is to strengthen our position as the world's leading provider of independent investment research, analysis, data and opinions for investment managers and advisers.”
IDC also owns eSignal, formerly Data Broadcasting, which includes an equities-oriented datafeed, a ticker plant, and desktop- and browser-based applications. “We actually own quite a bit of real-time content in the company now, but it would have taken us years to bring it all together and to extend it to the point that it could have been seen as an equivalent to Comstock,” said Clark, referring to Comstock's international coverage. The acquisition “really in one step has taken us to where we want to be,” he added.
Clark described eSignal as a technical analysis tool used by traders, and said its primary customers are individual investors and individual professional investors. IDC is making the product more institutionally oriented, and the Comstock content will help accelerate that process, Clark said.
IDC will spend money in the first year to create a best-of-breed, real-time operation that services its entire business, Clark said. “The Comstock infrastructure will form the basis for the real-time capability within the company,” he said. “It will feed into eSignal; our data content businesses that service mutual funds; other post-trade operations; it will flow into our product sets in Europe and Asia that service the local industries there. Operational synergies will be delivered in two to three years.”
Commenting on the deal, Ken Marlin, managing partner of Marlin & Associates, a mergers-and-acquisitions advisory firm, and formerly CEO of Telekurs NA and Telesphere said, “This is a win for S&P as a seller, a win for the people of Comstock and a win for Interactive Data. It's a transaction made in heaven.”
Regarding the price tag, Marlin said, “it was a full price and no financial buyer could have justified that price. But it is probably a reasonable price from the Interactive Data perspective,” because combining Comstock with eSignal should give IDC near-term cost benefits of at least $10 million a year, he said.
The deal also strengthens IDC's eSignal business and European presence, and bolsters IDC's back-office business by giving it a more robust datafeed as well as access to international data, Marlin added.