New York – The acquisition of TheMarkets.com by Capital IQ was announced today, further enhancing Cap IQ’s research offering. Cap IQ is now a full-fledged competitor to Thomson Reuters and Bloomberg in the distribution of investment research.
According to the Wall Street Journal, Cap IQ is purchasing TheMarkets.com for $300 million. TheMarkets.com was formed by a group of ‘bulge bracket’ investment banks in 2000 as a joint venture to distribute their proprietary research. Ownership of TheMarkets.com now includes eight Wall Street banks: Bank of America Merrill Lynch; Citigroup Inc; Credit Suisse Group AG; Deutsche Bank AG; Goldman Sachs; J.P. Morgan; Morgan Stanley; and UBS AG’s UBS Investment Bank. Ironically, Thomson Reuters was also an owner.
Cap IQ was also a beneficiary of the Thomson Reuters merger, which in return for regulatory approval of the merger, required the disposition of Reuters earnings estimates database to Cap IQ. Cap IQ, which itself was acquired by Standard & Poor’s, a unit of the McGraw-Hill Companies for $200 million in 2004. At the time it seemed a pricey acquisition with a 6x multiple, but Cap IQ has since flourished. Cap IQ has a strong footprint in investment banking and private equity, and has been expanding into the buy side.
Cap IQ will be a good parent for TheMarkets.com, which has been challenged technologically. Cap IQ is well respected for its user interface, and has been disciplined in developing and maintaining its technology.
This acquisition puts Cap IQ on an even footing with Thomson Reuters, which with its First Call product, has been the market leader in research distribution. The third major player, Bloomberg, is aggressively expanding its research offering as well. In typical Bloomberg fashion, it is going a different route, relying less on distributing Street research. It is staffing up internally to create its own research product.
In all, it makes for exciting times in the research distribution space.