McGraw Hill Financial Seeks to Increase Investment in CRISIL Initiates Voluntary Offer for Additional 22.23% of India's Leading Credit Ratings, Research Company
NEW YORK, June 2, 2013 /PRNewswire-FirstCall/ -- McGraw Hill Financial (NYSE: MHFI) today announced it is making a voluntary open offer to acquire up to 15,670,372 shares, representing 22.23% of the total equity shares outstanding in CRISIL Limited, a global analytical company and India's leader in credit ratings and research. Full acceptance of the offer would increase McGraw Hill Financial's total stake in CRISIL to 75% from 52.77%.
The cash offer of INR 1210 or $21.42 per share represents a premium of 29% to the closing share price on May 31, 2013, and a premium of 12% to CRISIL's all-time closing high on the National Stock Exchange of India Limited (NSE). The offer also provides an attractive liquidity opportunity to current CRISIL shareholders. CRISIL's stock had an average daily trading volume of 32,551 shares cumulatively on the NSE and BSE during the last 12 months.
"The offer to increase our investment in CRISIL represents a vote of confidence in CRISIL, its Board of Directors, leadership team and talented employees, as well as the products and services CRISIL brings to market. The offer also represents a vote of confidence in the growth prospects of India and the other markets that CRISIL serves," said Harold McGraw III, Chairman, President and CEO of McGraw Hill Financial. "We intend to keep CRISIL a listed public, independent company to maintain the company's leadership and essential role across the Indian economy, and to preserve the entrepreneurial, growth-oriented spirit of the high-performing CRISIL team."
"Since 1996, we have had a productive relationship with CRISIL, which has demonstrated a durable record of strong top- and bottom-line growth," said Douglas Peterson, President of Standard & Poor's Ratings Services, a business unit of McGraw Hill Financial. "We look forward to continuing our collaboration and to supporting the ongoing growth of their businesses in India and internationally."
Full acceptance of the offer at current exchange rates values the total transaction at approximately $340 million. McGraw Hill Financial will finance the transaction with existing cash resources.
The tender offer period is expected to begin in July 2013 and conclude in early August 2013. All requirements and procedures under Indian law will be strictly followed.
The transaction would be immediately accretive to McGraw Hill Financial's earnings per share.
CRISIL and S&P Ratings Services first signed an affiliation agreement in 1996. The relationship was further strengthened in 1997 when McGraw Hill Financial acquired its initial equity stake in CRISIL. In 2005, McGraw Hill Financial became CRISIL's majority shareholder.
Over the last five years, CRISIL's revenue has increased at a compound annual growth rate of 19.3%. In 2012, CRISIL had total sales of INR 9,777 million or $173.1 million, 63% of which was generated outside of India, and net income of INR 2,204 million or $39.0 million, according to CRISIL's 2012 Annual Report.
This transaction is consistent with McGraw Hill Financial's record of successful partnerships and selective tuck-in acquisitions, which augment the company's capabilities and help drive international expansion. In 2012, for example, the company launched S&P Dow Jones Indices, a joint venture with CME Group that is the world's largest provider of financial market indices.
The details of the offer can be found in the public announcement which will be available at www.sebi.gov.in, www.bseindia.com, and www.nseindia.com, and the detailed public statement and letter of offer will be filed with relevant stock exchanges and the Securities Exchange Board of India.
Manager to the Offer is Morgan Stanley India Company Private Limited.
About McGraw Hill Financial
McGraw Hill Financial, a financial intelligence company, is a leader in credit ratings, benchmarks and analytics for the global capital and commodity markets. Iconic brands include: Standard & Poor's Ratings Services, S&P Capital IQ, S&P Dow Jones Indices, Platts, CRISIL, J.D. Power & Associates, McGraw Hill Construction and Aviation Week. The Company has approximately 17,000 employees in 27 countries. Additional information is available at www.mhfi.com.
About CRISIL Limited
CRISIL is a global analytical company providing ratings, research, and risk and policy advisory services. We are India's leading ratings agency. We are also the foremost provider of high-end research to the world's largest banks and leading corporations. Additional information is available at www.crisil.com.
The forward-looking statements in this news release involve risks and uncertainties and are subject to change based on various important factors, including success of the voluntary open offer; worldwide economic, financial, liquidity, political and regulatory conditions; the health of debt (including U.S. residential mortgage-backed securities and collateralized debt obligations) and equity markets, including possible future interest rate changes; the health of the economy; the successful marketing of competitive products; and the effect of competitive products and pricing.
Director, Corporate Media Relations
McGraw Hill Financial
Head of Communications, Asia-Pacific
Standard & Poor's Ratings Services
Vice President, Investor Relations
McGraw Hill Financial
Issued: New York, June 2, 2013; Mumbai, India, June 3, 2013
SOURCE McGraw Hill Financial