EDGAR Online, Inc. to Acquire Financial Insight
EDGAR Online, Inc., an Internet-based
provider of business, financial, and competitive information derived from
U.S. Securities and Exchange Commission EDGAR filings, announced that it
has entered into a definitive agreement to acquire Financial Insight Systems
(FIS), a privately held company that sells EDGAR-derived data and information
systems to large financial institutions. The acquisition will significantly
enhance EDGAR Online’s position as a leading, full-service, financial information
provider. The combined company is expected to have an immediate revenue
run-rate in excess of $20 million per year upon completion of the transaction,
doubling the current revenues of EDGAR Online and moving the company toward
profitability, according to the announcement.
Under the terms of the stock purchase agreement, EDGAR Online will buy
all the outstanding shares of FIS for $11.8 million in cash; 2.45 million
shares of newly issued EDGAR Online stock; and a $6 million, 2-year 7.5-percent
note, for a total transaction value of $28 million. The transaction has
been recommended by the board of directors of each company and was expected
to close by mid-November. EDGAR Online shareholder approval is not required.
According to the announcement, highlights of the transaction include
Increase in corporate customers—The addition of FIS’s corporate customer
base will enable EDGAR Online to reach its stated revenue mix objective
1 year ahead of schedule. More than 70 percent of EDGAR Online’s revenues
will now come from sales of customized data and information services directly
to corporations. FIS’s major clients include NASDAQ, Thomson Financial,
Pink Sheets, CCH, and Verizon.
Improved cash flow—The combined company expects to be cash-flow-positive
during the fourth quarter of this year.
Stronger technology focus—The combined company will have over 70 technologists
who will enable EDGAR Online to accelerate product development and complete
custom work for its expanding list of corporate clients. Albert Girod,
founder and CEO of FIS, will become the chief technology officer of EDGAR
Online and will join the company’s board of directors.
“Our two companies couldn’t be better suited,” said Susan Strausberg, CEO
of EDGAR Online. “We have built a strong EDGAR Online brand name known
for information services provided both on public Web sites and as customized
data services sold directly to corporations. FIS has concentrated on developing
the technology base needed to extract and deliver very high-quality information
from EDGAR filings. It has used this superior technology to penetrate the
high end of the financial information markets. Together we will have the
marketing, technology, and critical mass needed to become a major player
in the business information industry.”
Girod said: “This transaction clearly positions EDGAR Online as the
leader in the financial information industry. The company will have a long
list of blue chip clients and an unmatched array of real-time products
and services. We are pleased to be partnering with such a formidable force
in the industry.”
Don Bosic, senior vice president of the Interactive Group at NASDAQ,
said, “NASDAQ looks forward to taking advantage of the new services that
will be available to us as a result of the combination between FIS and
While this acquisition bolsters primarily the corporate segment of its
business, EDGAR Online remains committed to its Internet-based advertising
and online subscriptions revenue streams, which are expected to account
for approximately 25 percent of revenues next year. New products available
from FIS will be added to EDGAR Online’s Web sites as a result of the transaction.
EDGAR Online’s headquarters will remain in Norwalk, Connecticut. The
combined company will have approximately 120 employees with offices in
Baltimore and Rockville, Maryland; Kirkland, Washington; and New York.