Reed Elsevier announces that it has entered into a definitive agreement to acquire the entire issued share capital of Accuity Holdings Inc. from the global investment firm Investcorp for a consideration of L 343m payable in cash. The acquisition will be immediately accretive to adjusted earnings and is expected to close in the fourth quarter. Post tax returns are expected to cover the WACC by the third year.
Accuity is a leading US provider of online subscription-based data solutions for the financial services industry. Accuity’s products enable customers to maximize the accuracy of their banking and payment transactions, and to minimise the risk of non-compliance with governments regulations in these transactions. The business is split up in 3 principal segments: payment efficiency, risk reduction and national regulatory services. Accuity’s customer retention rates exceed 95% and revenues grow at double digit rates. The company has offices in the US and the UK and serves over 14,000 clients, including all of the top 25 US banks.
Accuity is a complementary business with both the on-line product Bankers’ Almanac (RBI) and the financial services business of LexisNexis Risk. Bankers’ Almanac is a pay on-line database of international banks and financial institutions including payment data, ownership, summaries, credit ratings, etc. Accuity will be integrated with the former and will share the combined data assets with LexisNexis Risk Solutions. The CEO of Accuity joins Reed Elsevier to run the enlarged business within the data businesses of RBI.
Our View:
The acquisition fits well in the good-growing part of the RBI business, which is on-line data services and in Reed’s Risk business. The combination of the businesses will enable the company to develop new products and services. The acquisition also strengthens the geographical presence since Bankers’ Almanac is mainly active outside the US while Accuity operates in the US and the UK.