Verisk share price down, to acquire Wood Mackenzie for £1.85 billion

Verisk Analytics Inc announced on Tuesday that it will purchase privately held Wood Mackenzie in a deal that values the energy research and consultancy group at £1.85 billion.

The New Jersey-based company said it had reached an agreement with private-equity firm Hellman & Friedman, which acquired a majority stake in Wood Mackenzie in 2012 for £1.1 billion, and other shareholders in order purchase the entire Edinburgh and extend the global reach of its services.

With the acquisition Verisk, which is a leading provider of data analytics for the insurance industry, seeks to place itself “at the center of the global energy market” as a trusted information supplier.

Verisk also aims to capitalize on Wood Mackenzies expertise in energy, metals and mining data research amid a time when many companies from those industries were forced to rethink their strategies, spending and projects after getting hammered down by the plunge in commodity prices.

Wood Mackenzie services more than 800 energy and metals companies across 80 countries. The company has been operating more than 40 years and currently employees over 1 000 staffers word-wide, including in offices located in Dubai, Houston, London, Singapore and Sydney.

During the past year Wood Mackenzie generated a revenue of £227 million and Verisk projected that the acquisition would boosts its full-year earnings in 2015 by between $0.16 and $0.20 per share, excluding transaction-related fees.

Subject to regulatory approval, the deal is expected to close during the second quarter of 2015 and Verisk plans to finance the transaction via a mix of about $2 billion in debt and up to $800 million in equity.

After the acquisition, Wood Mackenzies current Chief Executive Stephen Halliday will continue to lead his team and will report directly to Scott Stephenson, Verisk CEO.

Wood Mackenzie has been rumored to seek an initial public offering with the intention to raise as much as £2 billion. However, after the unconfirmed information was released several companies reportedly launched takeover bids, including McGraw Hill Financials, which also owns ratings company Standard & Poor’s, £1.5 billion offer.

“This combination is a natural home for the business weve built over the years and a great opportunity for our customers and employees,” said Mr. Stephenson.

Verisk gained 1.00% on Monday and closed at $71.37 on the NASDAQ, marking a one-year increase of 14.66%. The company is valued at $11.28 billion. The stock slipped 0.36% on Tuesday to $71.10 during after-hours trading.

According to the Financial Times, the 14 analysts offering 12-month price targets for Verisk have a median target of $75.00, with a high estimate of $84.00 and a low estimate of $68.00. The median estimate represents a 5.09% increase from the last closing price.