TMX invests to expand capabilities in
data-driven analytics and indexing solutions for a global client
base of issuers and advisors, announces analyst webcast and
conference call on December 14, 2023
at 8:00am EST to discuss
- TMX to acquire remaining ~78% of the common units of VettaFi
for US$848 million
- Deal accelerates long-term growth strategy as well as financial
and transformational objectives
- Increases proportion of revenue from recurring and global
sources
- Adds innovative new client service team and capabilities to
GSIA, TMX's fastest growing segment
TORONTO, Dec. 13,
2023 /PRNewswire/ - TMX Group Limited (TMX Group)
today announced it has agreed to acquire the remaining
approximately 78% of the common units of VettaFi Holdings LLC
(VettaFi), a leading US-based, indexing, digital distribution,
analytics and thought leadership company, for US$848 million ($1.15
billion*). This brings the total amount to be paid for full
ownership to US$1.03 billion
($1.40 billion*), which includes the
strategic investments TMX Group made in VettaFi in the first half
of 2023 for approximately 22% of the common units.
"The acquisition of VettaFi will add a dynamic new component to
our growing information business, with an exciting set of
capabilities and a visionary, innovative team committed to client
success," said John McKenzie, Chief
Executive Officer, TMX Group. "The experience of working together
this year has confirmed that TMX and VettaFi are a powerful
combination and a tremendous culture fit. Moving forward, the
addition of VettaFi increases the depth and value of data-driven
insights we provide to clients, expands our digital expertise and
enriches our industry-leading support for ETF issuers. From a
strategic standpoint, this acquisition accelerates TMX's long-term
global expansion, and increases the proportion of revenue derived
from our Global Solutions, Insights and Analytics division, and
from recurring sources."
VettaFi provides a comprehensive suite of global indices through
its index factory, robust ETF services including ETF trends and
analytics, a global ETF database, and digital distribution. In
addition to providing interactive online tools and research,
VettaFi offers asset managers an array of indexing and digital
distribution solutions to innovate and scale their businesses. Mr.
McKenzie and Jay Rajarathinam, Chief
Operating Officer, TMX Group, currently sit on the VettaFi Board of
Directors. For more information visit vettafi.com.
"Early on in our relationship with TMX Group it became clear
that not only did we have complementary products and solutions, but
our companies also have complementary cultures rooted in
like-minded values and ambitious vision," said Leland Clemons, Chief Executive Officer,
VettaFi. "Both companies place a premium on putting the client
first and moving opportunity into action. I am excited for
VettaFi's clients, partners and employees as we begin this next
chapter. Together, we will make markets and each other better."
"Today marks an exciting chapter in VettaFi's transformation and
is a testament to the leadership team's client focus and commitment
to relentless innovation," said Andrew
Feller, Managing Partner of Aretex Capital Partners. "We
have enjoyed working side-by-side with the team to recruit top
financial services and technology talent to better serve the asset
management community and its broader ecosystem."
Summary financial details:
- 80%+ recurring revenues over the LTM through September 30, 2023**
- Implied total valuation net of expected tax benefit of 15.4x
2024E adjusted earnings before interest, taxes, depreciation and
amortization (adjusted EBITDA). We expect a tax benefit with a net
present value of approximately US$170
million ($231 million*),
primarily representing amortizable acquired goodwill and
intangibles**
- The transaction is expected to be accretive to adjusted
earnings per share*** in year one, excluding any synergies
- Transaction is expected to be financed with committed bank debt
up to US$1.0 billion ($1.36 billion*) in term loans with US$600 million ($814
million*), up to US$200
million ($271 million*) and
US$200 million ($271 million*) maturing 12, 18 and 24 months from
closing, respectively; with leverage ratio of approximately 3.5x
after closing and repayment of VettaFi debt, with plans to return
to target leverage range two years post-close
- TMX to assume US$100 million
($136 million*) of VettaFi debt which
we plan to retire with funds made available to TMX under new term
loan
- VettaFi will be included in TMX's Global Solutions, Insights
& Analytics segment
Completion of this transaction is expected in January 2024, subject to customary closing
conditions.
Evercore served as exclusive financial advisor to TMX Group, and
WilmerHale LLP acted as legal counsel to TMX Group. National
Bank of Canada, The
Toronto-Dominion Bank and Bank of Montreal are providing the new committed
credit facilities to TMX Group. Barclays served as exclusive
financial advisor to VettaFi, and Ropes & Gray LLP acted as
legal counsel to VettaFi.
*Based on CAD/USD
exchange rate of 1.3574 at December 12, 2023. Actual amounts in
Canadian dollars subject to change.
|
**VettaFi financial
information is unaudited and provided by VettaFi management. It may
not be prepared in accordance with IFRS for public
companies.
|
***Adjusted EPS
excludes the impact of acquisition and related costs, integration
costs, amortization of purchased intangibles, and other
items.
|
Webcast and conference call details
TMX Group will be hosting a webcast to discuss the announced
transaction at 8:00 a.m. EST on Thursday,
December 14, 2023. The link to the webcast and the investor
presentation is available in TMX's shareholder events section.
Phone numbers for the live call are 416-764-8659 or
1-888-664-6392. An audio replay of the conference call will be
available at 416-764-8677 or 1-888-390-0541, pass code 629048#.
Please note that media will be participating in listen-only
mode.
Participating in the call:
- John McKenzie, Chief Executive
Officer, TMX Group
- David Arnold, Chief Financial
Officer, TMX Group
- Amin Mousavian, Vice President,
Investor Relations & Treasury, TMX Group
The webcast of the conference call will also be available and
archived in TMX's shareholder events section.
Caution Regarding Forward-Looking
Information
This presentation of TMX Group Limited ("TMX Group", "us", "we",
"our") contains "forward-looking information" (as defined in
applicable Canadian securities legislation) that is based on
expectations, assumptions, estimates, projections and other factors
that management believes to be relevant as of the date of this
presentation. Often, but not always, such forward-looking
information can be identified by the use of forward-looking words
such as "plans", "expects", "is expected", "budget", "scheduled",
"targeted", "estimates", "forecasts", "intends", "anticipates",
"believes", or variations or the negatives of such words and
phrases or statements that certain actions, events or results
"may", "could", "would", "might" or "will" be taken, occur or be
achieved or not be taken, occur or be achieved. Forward-looking
information, by its nature, requires TMX Group to make assumptions
and is subject to significant risks and uncertainties which may
give rise to the possibility that our expectations or conclusions
will not prove to be accurate and that our assumptions may not be
correct. Examples of forward-looking information in this
presentation include, but are not limited to, the anticipated
benefits of the transactions to both TMX Group and VettaFi; the
expected impact on TMX Group's earnings and Adjusted earnings per
share; VettaFi's 2024 revenue, VettaFi's Adjusted EBITDA, and
VettaFi's Adjusted EBITDA margin; TMX Group's leverage ratio after
closing; the ability to integrate VettaFi into TMX Group; the
source and amount of funds to fund the acquisition; the ability of
TMX Group to refinance the new credit facility or otherwise
deleverage and the timing thereof; and the timelines for the
transactions and the completion of the transactions, each of which
is subject to a number of significant risks and uncertainties.
These risks include: competition from other exchanges or
marketplaces, including alternative trading systems and new
technologies, on a national and international basis; dependence on
the economies of Canada and
the United States; adverse effects
on our results caused by global economic conditions or
uncertainties including changes in business cycles that impact our
sector; failure to retain and attract qualified personnel;
geopolitical and other factors which could cause business
interruption; dependence on information technology; vulnerability
of our networks and third party service providers to security
risks, including cyber attacks; failure to properly identify or
implement our strategies; regulatory constraints; constraints
imposed by our level of indebtedness, risks of litigation or other
proceedings; dependence on adequate numbers of customers; failure
to develop, market or gain acceptance of new products; failure to
effectively integrate the VettaFi acquisition, to achieve planned
economics or divest underperforming businesses; currency risk;
adverse effect of new business activities; adverse effects from
business divestitures; not being able to meet cash requirements
because of our holding company structure and restrictions on paying
dividends; dependence on third party suppliers and service
providers; dependence of trading operations on a small number of
clients; risks associated with our clearing operations; challenges
related to international expansion; restrictions on ownership of
TMX Group common shares; inability to protect our intellectual
property; adverse effect of a systemic market event on certain of
our businesses; risks associated with the credit of customers; cost
structures being largely fixed; the failure to realize cost
reductions in the amount or the time frame anticipated; dependence
on market activity that cannot be controlled; the regulatory
constraints that apply to the business of TMX Group and its
regulated subsidiaries, costs of on exchange clearing and
depository services, trading volumes (which could be higher or
lower than estimated) and revenues; future levels of revenues being
lower than expected or costs being higher than expected.
Forward-looking information is based on a number of assumptions
which may prove to be incorrect, including, but not limited to,
assumptions with respect to the impact of the cost of acquisition
financing on adjusted earnings per share; assumptions in connection
with the ability of TMX Group to successfully compete against
global and regional marketplaces; business and economic conditions
generally; exchange rates (including estimates of exchange rates
from Canadian dollars to the U.S. dollar or British pound
sterling), commodities prices, the level of trading and activity on
markets, and particularly the level of trading in TMX Group's key
products; business development and marketing and sales activity;
the continued availability of financing on appropriate terms for
future projects; productivity at TMX Group, as well as that of TMX
Group's competitors; market competition; research and development
activities; the successful introduction and client acceptance of
new products; successful introduction of various technology assets
and capabilities; the impact on TMX Group and its customers of
various regulations; TMX Group's ongoing relations with its
employees; and the extent of any labour, equipment or other
disruptions at any of its operations of any significance other than
any planned maintenance or similar shutdowns. While subsequent
events and developments may cause TMX Group's views to change, TMX
Group has no intention to update this forward-looking information,
except as required by applicable securities law. This
forward-looking information should not be relied upon as
representing TMX Group's views as of any date subsequent to the
date of this presentation. TMX Group has attempted to identify
important factors that could cause actual actions, events or
results to differ materially from those current expectations
described in forward-looking information. However, there may be
other factors that cause actions, events or results not to be as
anticipated, estimated or intended and that could cause actual
actions, events or results to differ materially from current
expectations. There can be no assurance that forward-looking
information will prove to be accurate, as actual results and future
events could differ materially from those anticipated in such
statements. Accordingly, readers should not place undue reliance on
forward-looking information. These factors are not intended to
represent a complete list of the factors that could affect TMX
Group. Important additional information identifying risks and
uncertainties and other factors is contained in TMX Group's 2022
Annual MD&A under the headings entitled "Caution Regarding
Forward-Looking Information" and "Enterprise Risk Management" which
may be accessed at tmx.com in the Investor Relations section under
Regulatory Filings.
Non-GAAP Measures
Both Adjusted earnings per share and the leverage ratio provided
above are non-GAAP ratios and do not have standardized meanings
prescribed by GAAP and are therefore unlikely to be comparable to
similar measures presented by other companies. Adjusted EPS
excludes, among other things, acquisition related costs,
integration costs,and amortization of intangibles related to
acquisitions and other items as disclosed in our Q3 2023 MD&A;
and the leverage ratio is defined as total long term debt and debt
maturing within one year divided by Adjusted EBITDA. Adjusted
EBITDA is calculated as net income excluding interest expense,
income tax expense, depreciation and amortization, transaction
related costs, integration costs, one-time income (loss), and other
significant items that are not reflective of TMX Group's and
VettaFi's underlying business operations. For more information on
adjusted EPS and debt to adjusted EBITDA including definitions and
explanations of how these measures provide useful information,
refer to the Non-GAAP Measures section in TMX Group's Q3-2023
Management's Discussion and Analysis dated October 30, 2023, which is incorporated by
reference into this press release and which is available on TMX
Group's website at www.tmx.com and on SEDAR+ at
www.sedarplus.ca.
About TMX Group (TSX:X)
TMX Group operates global markets, and builds digital
communities and analytic solutions that facilitate the funding,
growth and success of businesses, traders and investors. TMX
Group's key operations include Toronto Stock Exchange, TSX
Venture Exchange, TSX Alpha Exchange, The Canadian Depository for
Securities, Montréal Exchange, Canadian Derivatives Clearing
Corporation, and Trayport which provide listing markets,
trading markets, clearing facilities, depository services,
technology solutions, data products and other services to the
global financial community. TMX Group is headquartered in
Toronto and operates offices
across North America (Montréal,
Calgary, Vancouver and New
York), as well as in key international markets including
London, Singapore and Vienna. For more information about TMX Group,
visit our website at www.tmx.com. Follow TMX Group on Twitter:
@TMXGroup.
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SOURCE TMX Group Limited