- Clarivate plc (NYSE: CLVT) announced this week that it is buying ProQuest in a $5.3 billion deal. These are the details.
Clarivate plc (NYSE: CLVT) — a global leader in providing trusted information and insights to accelerate the pace of innovation — announced it had signed a definitive agreement to buy ProQuest, which is a leading global software, data, and analytics provider to academic, research and national institutions, from Cambridge Information Group (a family-owned investment firm), and other partners including Atairos, for $5.3 billion, including refinancing of ProQuest debt.
The consideration for the deal is about $4 billion in cash and $1.3 billion of equity. The deal, which is subject to customary closing conditions, including regulatory approvals, is expected to close during the third quarter of 2021.
With a goal to accelerate and improve education, research, and innovation, ProQuest delivers content and technology solutions to over 25,000 academic, corporate, and research organizations in over 150 countries. And the acquisition will establish Clarivate as a premier provider of end-to-end research intelligence solutions and significantly expand its content and data offerings as the addition of ProQuest will materially complement the Clarivate Research Intelligence Cloud.
By combining these 2 customer-focused businesses with a purpose to accelerate innovation at their core, the companies will create a world-leading software and information provider for research-focused organizations to fuel scientific discovery and innovation into the future.
Upon the completion of the deal, 2 members of the ProQuest Board will join the Clarivate Board, including Andy Snyder, who will have the position of Vice Chairman of the Clarivate Board, and Michael Angelakis, Chairman and CEO of Atairos.
These are the strategic benefits of the deal:
1.) Creates a leading software and content information provider for academic institutions, governments, public libraries, and corporations. The combination of these two organizations will provide a gateway to the world’s largest collection of interoperable, expertly curated content, including journal content, primary sources, dissertations, news, streaming video, and more across multiple academic disciplines. And Clarivate will continue to expand its market-leading software to enhance its discovery, sharing, and management capabilities.
2.) Opens new sales opportunities to drive growth in existing and complementary markets. As enterprise software is the fastest-growing library market segment and has high customer loyalty due to workflows integrated into core library operations. And this deal will provide Clarivate with access to complementary markets and varied users, including public libraries, research libraries, school districts, and community colleges, with the opportunity to deliver new campus-wide platforms to provide a unified source of knowledge discovery.
3.) The addition of ProQuest moves the academic analytical capabilities of Clarivate beyond its traditional realm of journal publication data and citations into a much wider range of information sources. And there will be long-term predictive and prescriptive analytics opportunities from the enhanced combination of ProQuest’s data cloud with the billions of harmonized data points in the Clarivate Research Intelligence Cloud.
4.) The deal is expected to be double-digit accretive to Clarivate earnings in 2022 and mid-teens accretive in 2023.
5.) Last year, ProQuest generated $876 million of revenue, 4% from organic growth, and $250 million of Adjusted EBITDA. And the acquisition is expected to provide significant cost synergies, which in addition to revenue synergies, is expected to drive both ProQuest and Clarivate Adjusted EBITDA growth and expand ProQuest’s Adjusted EBITDA margin.
6.) Significant cost and tax savings opportunities: Clarivate expects to benefit from more than $100 million of cost synergies across the organization within the 15 – 18 months after the close of the transaction. Clarivate also expects to benefit from approximately $65 million in annual cash tax savings from the transaction structure.
7.) The deal is expected to generate strong cash flow that will enable Clarivate to reduce its debt, continue investing in product development, and pursue additional business development opportunities.
In connection with the deal, Clarivate has secured a backstop consisting of a $4 billion fully committed bridge facility from Citi and Goldman Sachs & Co. LLC. And Clarivate intends to obtain long-term financing from debt and equity markets before the closing of the transaction.
KEY QUOTES:
“Clarivate and ProQuest are highly complementary businesses, each with a rich and storied heritage. We share the goal to accelerate innovation through research and knowledge sharing and together we will enable our customers to solve the world’s most complex challenges with content dating back centuries, and technologies that address the needs of 21st century customers.”
— Jerre Stead, Executive Chairman and CEO, Clarivate
“I have seen ProQuest evolve to meet our customers’ ever-changing needs over the last several decades and fully understand that the challenges and opportunities they face have never been greater. I am confident that the company will continue to have the resources required to maintain the impressive track record of innovation that our customers count on – to create a world leading organization in research and innovation.”
— Andy Snyder, Chairman of ProQuest and CEO of Cambridge Information Group
“Clarivate is building a globally connected and highly personalized experience for researchers, academic institutes and funders across the entire digital research value-chain, from ideation through to outcome. With this acquisition we will be able to further empower both present and future generations of academic and corporate researchers as they each pursue their journey of innovation.”
— Mukhtar Ahmed, President, Science at Clarivate
“Through this combination, ProQuest will be enabled to better serve the evolving needs of our customers by providing end-to-end solutions to our customers faster than we could on our own as well as expanding our global reach beyond our current capabilities. We look forward to a bright and exciting future for ProQuest and our customers.”
— Matti Shem Tov, CEO, ProQuest
