NDF, which is based in Tokyo, is a leading provider of securities pricing, reference data and related services to most of the major financial institutions in Japan. Interactive Data and NDF have been partners in a re-distribution relationship in Japan for more than 14 years, providing financial institutions with global end-of-day securities pricing, evaluations and reference data for clientsâ mission-critical investment operations, including portfolio valuation and accounting. NDFâs services are widely used in Japan by banks, asset and funds management companies, insurance companies, custody banks, trust banks and securities firms.
This acquisition advances Interactive Dataâs strategy of expanding its business in the Asia-Pacific region. By combining NDFâs knowledge of the Japanese market with Interactive Dataâs experience in delivering information for millions of global securities every day and robust technology infrastructure, Interactive Data will be able to directly provide financial institutions in Japan with an even broader range of financial data and services, including fixed income analytics, valuations of complex financial instruments and indicative valuations of exchange-traded funds (ETFs) and other related structures. After the transaction is closed, Interactive Data plans to change the name of NDF to Interactive Data Japan KK while retaining the personnel and operating the business in a manner consistent with current practices.
âIt is important for Interactive Data to have a strong and direct presence in the worldâs second-largest economy,â said Stuart Clark, president and chief executive officer of Interactive Data Corporation. âWe have enjoyed a successful and long-standing relationship with NDF in Japan over the past 14 years, and share a common approach to building long-term, trusting relationships with our clients. We believe that acquiring NDF will enable Interactive Data to accelerate its growth in Japan and make progress toward our objective of being the first choice for financial market data and related services in that marketplace.â
âThe acquisition of NDF will provide Interactive Data with a strong direct presence in Japan, which will help us to further grow our business in the Asia-Pacific region,â stated James Farrer, managing director of Interactive Data Asia-Pacific. âMoving from a distributor model to an ownership model in Japan is an important milestone for us. Financial institutions are focused on driving efficiencies in financial operations across their front, middle and back offices while remaining compliant with evolving regulations. The NDF team is a very capable, client-oriented organization and we look forward to working with them to capitalize on our growth opportunities in Japan. Interactive Data plans to build on NDFâs strengths of high-quality services, in-depth market knowledge and responsive client support to expand the range of content and services that we can provide to Japanese financial institutions.â
Based on the unaudited financial statements provided to Interactive Data, NDF generated revenue for the fiscal year ended March 31, 2008 of approximately $11.7 million with operating expenses of approximately $8.8 million, which includes depreciation and $4.4 million in royalties payable to Interactive Data Corporation. Based on the contractual parameters of Interactive Dataâs existing relationship with NDF, royalty revenue generated through NDF has been classified as U.S. revenue for the Company. Following the completion of the acquisition, all NDF revenue will be included in the Companyâs Asia-Pacific revenue. NDFâs historical financial statements were not prepared in accordance with U.S. GAAP and thus future measures of NDFâs results prepared in accordance with U.S. GAAP could be materially different from NDFâs historical results.
Assuming the transaction closes before the end of 2008, Interactive Data anticipates that the transaction will not have a material impact on 2008 results. The transaction is expected to be cash flow positive but earnings neutral in 2009, and, through a combination of planned revenue growth and operational synergies, accretive to earnings in 2010.
At the initial closing, Interactive Data will acquire 64% of NDF from NTT DATA Corporation for 1.9 billion yen (or approximately U.S. $20.2 million based on current foreign exchange rates) in cash and NTT DATA Corporation will retain a 10% interest in NDF. At that time, minority shareholders, who collectively own 26% of NDF, will also be able to tender their shares. Interactive Data plans to work with NTT DATA Corporation for a smooth transition of the business in Japan and to acquire the remaining equity of NDF over the coming years. The purchase price to acquire 100% of NDF will be 3.0 billion yen (or approximately U.S. $31.6 million assuming constant foreign exchange rates) in cash.