A consortium led by Washington buyout house Carlyle Group (CG) announced an agreement Wednesday to acquire New York- and London-based investment-banking data provider Dealogic Holdings Ltd. from its management and founders in a $700 million deal.
Carlyle's co-investors are financial publisher Euromoney Institutional Investor plc, which is taking a 15.5% stake, and Randall Winn, co-founder and former CEO of Capital IQ, now part of McGraw Hill Financial Inc.
Euromoney is paying $59.2 million for its equity share in the acquisition vehicle Diamond Bidco Ltd. But in a complicated maneuver, it will finance the deal by selling two existing joint ventures with Dealogic, Capital DATA and Capital NET, back to Diamond Bidco for $85 million in cash and shares.
Euromoney said that, as well as the equity stake, its shares will entitle it to a seat on the new Dealogic board, 20% of the voting rights and the right to invest alongside Carlyle in any future acquisitions by Dealogic. However, Euromoney has also agreed to cap the payout it receives on any future sale of its investment in Dealogic at £350 million ($559 million), or 24.9% of its own market capitalization, based on its closing price of 1,103 pence on Tuesday.
The statement continued: "Euromoney will continue to receive and use (on a perpetual royalty-free basis) the league tables and data analytics products underpinning its GlobalCapital business.
"New Dealogic and Euromoney will explore further strategic and commercial opportunities, including sharing of content management systems and joint product development for specific customer groups."
The management and founders will also be reinvesting in the deal and are being offered up to 25% of the share capital — although this will shrink to a maximum of 21.4% of the equity and 20% of the votes, once the Euromoney joint venture transaction is completed. To make the investment possible, the management and founders are being offered $12.0816 per share — which values Dealogic's existing stock at $470.3 million — and a so-called partial share alternative of 1/6 of a share and $10.0680 in cash.
Carlyle has already received irrevocable undertakings to support the deal from the holders of 88.5% of the shares.
Dealogic provides data and analytics, market intelligence and capital markets software for financial institutions and expects to develop new software-as-a-service products, as well as growing via acquisitions. In 2013, Dealogic achieved adjusted Ebitda of $66.7 million on $152.3 million of revenue, and at that date had gross assets of $127.7 million.
Carlyle, led by co-founder and CEO David Rubenstein, will finance its part of the deal from its $13 billion fund Carlyle Partners VI Cayman LP, with debt funding from JPMorgan Chase Bank NA, Barclays plc, and Deutsche Bank AG. Joel Fleck, Andrew Owens and Hugh Moran of Barclays and Rupert Sadler, Christopher Dickinson and Adam Laursen of JPMorgan Czaenove Ltd. are advising Carlyle and Diamond Bidco.
Carlyle's legal advice is from Latham & Watkins LLP.
Andrew Pinder and Junya Iwamoto of Investec Bank plc are advising Dealogic, which is taking legal counsel from Charlie Jacobs, Ian Hunter and Nick Rumsby of Linklaters LLP.
Gleacher Shacklock LLP is acting as financial adviser to Euromoney.
Herbert Smith Freehills LLP is acting as legal adviser to Euromoney, which was down 1.7%, at 1,122 pence in midafternoon trading in London on Wednesday.