Financial software company FactSet (NYSE: FDS) will acquire CUSIP Global Services (CGS) from S&P Global in a $1.925 billion cash deal announced on December 27 aimed at increasing FactSet’s role in the global capital markets.
According to the filing, CGS “manages a database of 60 different elements uniquely identifying more than 50 million global financial instruments. It is the foundation for security master files relied on by critical front, middle and back-office functions. CGS is the exclusive provider of CUSIP and CINS identifiers globally and also acts as the official numbering agency for ISIN identifiers in the United States.” Once CGS is part of FactSet, it will continue to manage the CUSIP system with the American Bankers Association.
“CGS is a unique asset with tremendous market recognition providing deep alliances across the financial industry,” Phil Snow, CEO of FactSet, said in a press release. “Its core competency in securities identification aligns well with FactSets industry leading data management capabilities. We believe this acquisition will greatly benefit FactSets clients, employees and shareholders.”
“CGS has delivered outstanding service, reliability, and innovation to the global securities market for more than 50 years, and I am highly confident that FactSet will continue to build on this heritage,” Douglas L. Peterson, President and CEO of S&P Global, said in a press release.
Pursuant to the deal, CGS will become part of FactSet Research Systems Inc.’s Content and Technology Solutions. The deal is on a pro forma basis and will increase CTS’s annual subscription value by more than $425 million, according to the filing. Meanwhile, FactSet’s 2021 revenue was approximately $1.68 billion for annual subscription value and professional services. CGS’s team will report to Jonathan Reeve, Executive Vice President and Head of CTS, FactSet.
As noted in the filing, CGS generates around $175 million in annual revenue with revenue growth in the mid-to-high single digit range. Reportedly, CGS will give strong margins and be immediately accretive to FactSet’s adjusted operating margins. The deal is also expected to be accretive to FactSet’s adjusted diluted EPS in the first year, not including the purchase price amortization and the one-time integration costs. Furthermore, FactSet noted that it expects to receive approximately $200 million as a tax benefit as part of the transaction.
FactSet will fund the deal through on-hand cash and committed funding by PNC Capital Markets LLC, PNC Bank, National Association, BofA Securities, Inc. and Bank of America, N.A.
FactSet is represented by Cravath, Swaine & Moore LLP and its financial advisor is Centerview Partners LLC.
The deal is subject to customary closing conditions, including regulatory approval and the S&P Global and IHS Markit merger. Furthermore, this divestiture is necessary for the completion of the $44 billion S&P Global and IHS Markit merger as noted in their press release. The deal is expected to close in Q1 2022.
This transaction comes after FactSet purchased BI-SAM, a “provider of portfolio performance and attribution, multi-asset risk, GIPS composites management and reporting” for $205.2 million in 2017. Last month’s deal will help to further FactSet’s market position and open data strategy.