Why News Corp Is Buying Base Chemicals For $295 Million

By Dan Anderson ● Dec 27, 2021
  • News Corp (Nasdaq: NWS, NWSA) announced today it is buying Base Chemicals business from S&P Global and IHS Markit. These are the details.

News Corp (Nasdaq: NWS, NWSA) announced today it is buying Base Chemicals business from S&P Global and IHS Markit. Base Chemicals will become part of Dow Jones’ Professional Information Business, alongside OPIS, the energy and renewables data and information business. And the OPIS acquisition (along with related assets), also from S&P Global and IHS Markit, was announced in August. The addition of Base Chemicals and OPIS is going to further enhance Dow Jones’ information services business.

Base Chemicals is known for pricing data, insights, analysis, and forecasting capabilities for the world’s most important base chemicals delivered through its leading Market Advisory and World Analysis services. And Base Chemicals has a strong track record of growth with a revenue base that is nearly 100% digital and recurring, and, similar to OPIS, has high margins with modest Capex requirements.

By becoming part of Dow Jones, it is expected Base Chemicals is going to benefit from Dow Jones’ expertise in news, research and events. Plus Base Chemicals’ rich analysis and forecasting capabilities provide opportunities for Dow Jones to enhance its data, price and news solutions. Base Chemicals is also a companion to OPIS with significant customer overlap. And it is expected this new vertical will be led by the same management team responsible for OPIS and Base Chemicals today.

News Corp is buying Base Chemicals for $295 million in a cash transaction, subject to customary adjustments. And the agreement was reached following the UK Competition and Markets Authority request that IHS Markit divest Base Chemicals as part of the S&P Global and IHS Markit merger plans. 

News Corp’s acquisition of Base Chemicals is subject to customary closing conditions, including regulatory approvals and the completion of the S&P Global and IHS Markit merger. And News Corp expects to receive a step up in tax basis resulting in an annual deduction over the next 15 years with an estimated tax benefit of approximately $46 million on a present value basis.

In its most recent fiscal year, ended November 30, 2021, Base Chemicals was expected to generate approximately $65 million in revenues. And Base Chemicals’ revenues are geographically diverse, with more than 1700 customers across a wide range of industries, and approximately 185 employees. The main products include Market Advisory Services, which provide pricing, insights and weekly/monthly reports; and World Analysis, which produces annual reports and maintains a database of trends and long-term forecasts.

The total addressable market is expected to increase with new demand anticipated for pricing data and insights and analysis resulting from the transition to renewables and related structural changes in the broader chemical industry. And in the first quarter of Fiscal Year 2022, Dow Jones recorded a 15% increase in revenues, compared to the same quarter last year, with Segment EBITDA surging 32 percent – that profitability was a record for a first quarter. Plus Dow Jones’ Professional Information Business experienced a 13% increase in revenues in the quarter.

KEY QUOTES:

“We are delighted with the opportunistic acquisition of Base Chemicals, which complements our purchase of OPIS, and will certainly strengthen the highly profitable and decidedly digital Professional Information Business at Dow Jones. From setting price benchmarks for chemicals, to tracking renewables and monitoring resource trends that impact most companies, we expect the incomparable intelligence of Base Chemicals, combined with the news and analysis of Dow Jones, will be formidable and lucrative.”

— Robert Thomson, Chief Executive of News Corp

“Base Chemicals will help Dow Jones expand the reach of our information services to new professional users and industries. It will bolster our data and price expertise, adding valuable analysis and forecasting capabilities. Along with the strength of The Wall Street Journal, Barron’s, MarketWatch, Investor’s Business Daily, Dow Jones Newswires and Factiva, we believe Base Chemicals and OPIS will help Dow Jones customers navigate key issues of our time, including the ongoing transition to sustainability.”

— Almar Latour, Chief Executive Officer of Dow Jones and Publisher of The Wall Street Journal