NEW YORK (Reuters) – Initial bids for Interactive Data Corp (IDC.N), the financial market data provider controlled by Pearson PLC (PSON.L), are due in mid-February, sources familiar with the situation said.
Interactive Data has a market value of about $2.8 billion, based on Tuesday’s closing share price of $29.35 on the New York Stock Exchange. That values Pearson’s 61 percent stake at roughly $1.7 billion.
U.K. publisher Pearson, which owns the Financial Times newspaper as well as the world’s biggest educational publishing business and Penguin books, said in January that Interactive Data’s board was conducting a preliminary review of strategic alternatives for the company.
Several private equity firms are expected to put in initial bids, the sources said.
Goldman Sachs, which is representing the sellers, has suggested to potential buyers it could offer debt financing at a multiple of 5.5-5.75 times Interactive Data’s earnings before interest, taxes, depreciation and amortization (EBITDA), some of the sources said.
Other banks are suggesting offering slightly higher leverage multiples — up to 6 times — they said.
The banks’ willingness to offer debt at these multiples signals an ongoing improvement in the financing markets. Prior to the credit crunch, it was common to finance private equity deals with large amounts of debt. But in recent months, many deals were being financed with a higher proportion of equity.
Interactive Data sells financial information and analytical tools to banks and other financial institutions, bringing it stable revenue that makes it an attractive buyout target.
One source described the process as being fluid, meaning that the timetable for the sale could change.
Selling the stake would let Pearson use the proceeds for other acquisitions in education in emerging markets or digital learning.
Representatives for Goldman Sachs, Bedford, Massachusetts-based Interactive Data and London-based Pearson declined to comment. (Reporting by Megan Davies and Anupreeta Das; Editing by Derek Caney)