Morningstar has entered into a definitive agreement to acquire Realpoint,a Nationally Recognized Statistical Ratings Organization (NRSRO) specializing in structured finance.
The purchase price is $52 million, which is subject to post-closing adjustments, and includes around $42 million in cash and $10 million in restricted stock.
Realpoint had revenue of approximately $12 million in 2009. Morningstar expects to complete the transaction in the next few months.
Last Dec. 2, Morningstar announced its entry into credit ratings and now publishes ratings on around 150 of the largest U.S. companies.
Its corporate credit rating business and pending acquisition of Realpoint support one of the company's growth strategies, which is to continue building thought leadership in independent investment research.
Once the acquisition is completed, Realpoint will become a business unit of Morningstar, reporting to Catherine Odelbo, the acquiring firm's president of equity research.
Over time, the company will be rebranded under Morningstar. Robert Dobilas, chief executive officer of Realpoint, will continue to run the business, and the company will still have its offices in Horsham, Pa.
"We believe there's strong demand for unbiased ratings and research in the structured credit market, and we think the time is ripe to bring more competition to this market. This acquisition also builds on our recent entry into corporate credit ratings," said Joe Mansueto, chairman and chief executive officer of Morningstar. "Realpoint has earned the respect of investors, and has built a solid business by being a reliable source for structured finance ratings and analysis. Realpoint and Morningstar share a strong commitment to investors. Together, we want to restore credibility to the credit ratings business and be a positive force in rating structured products."
"Realpoint and Morningstar have highly complementary values and are focused squarely on the best interests of investors," said Dobilas, chief executive officer of Realpoint. "Becoming part of a well-respected firm like Morningstar will give us the resources to expand our business on a global level, with a company that is equally focused on transparency and reliable ratings and analysis. At a time when market uncertainty is unprecedented, Morningstar's acquisition of Realpoint demonstrates a firm commitment to re-establishing faith in structured finance ratings."
Realpoint now offers securities ratings, research, surveillance services, and data to help institutional investors identify credit risk in CMBS. Over 225 institutional investment firms subscribe to Realpoint's trusted ratings and analytics, such as the majority of money managers who invest in CMBS.