New York, NY – Last week, the team at Integrity Research Associates wrote about the volume of M&A transactions in the research industry in 2008. In our article, we discussed other deals we thought might be likely in the coming year. Little did we know that one of the transactions we mentioned was just around the corner. On December 22nd, Xinhua Finance announced that it was selling another of its wholly owned subsidiaries – Market News International to the Deutsche Bourse. This sale is scheduled to close by the end of January, 2009.
According to press releases, German stock exchange operator the Deutsche Boerse is paying $10 million to acquire U.S. based financial news agency Market News International from China’s Xinhua Finance. Holger Wohlenberg, Managing Director of Deutsche Boerse Market Data & Analytics explained the acquisition, “The acquisition of MNI is consistent with our growth strategy of adding globally relevant trading data to our real-time data feeds. Market participants pursuing automated trading strategies and quants will benefit from new trading signals for their algorithms.”
Founded in 1983, Market News International (MNI) is an accredited news agency which covers news which might impact the global currency, fixed-income, and credit markets. The firm has a staff of 85 employees and has bureaus in Beijing, Berlin, Brussels, Chicago, Frankfurt, London, New York, Paris, Singapore, Tokyo, and Washington D.C. The deal was set to close by the end of January 2009 subject to approval of the German competition commission.
As we mentioned in last week’s article, Xinhua Finance has not hidden its desire to sell off the various financial services properties it had acquired in recent years, so the sale of MNI comes as no surprise. However, we do suspect that the price Xinhua Finance got for MNI was less than it had hoped for as the mergers or sales of firms like Bear Stearns’, Lehman Brothers, and Merrill Lynch probably had a significant negative impact on the financial condition of Market News.
It is somewhat interesting to us that Xinhua did not try and roll fixed-income commentary provider Stone McCarthy into the deal to sell Market News. Stone McCarthy has probably suffered severe cancellations due to the mergers or sales discussed above, and as other Wall Street firms have slimmed down their fixed-income departments. Given these developments, we doubt Xinhua has found a large number of buyers who are willing to pay much for Stone McCarthy. In fact, we would not be surprised if Xinhua Finance is forced either to sell the firm to company management, or close the business down altogether.