Bloomberg LP: sale for the chief
Wall Street loves Michael Bloomberg. And it may go beyond shared values. Mr Bloomberg’s vast fortune is fuelling his rise in the Democratic primary polls. But conflict of interest concerns are forcing him to think about the future of his financial data empire, Bloomberg LP.
On Tuesday, Mr Bloomberg’s camp said he would be willing to part with the business he built should he move into the White House. With an enterprise value of perhaps above $50bn, a sale would be one of the blockbuster deals of all-time.
The London Stock Exchange’s mooted deal for Refinitiv, the financial data provider owned by Blackstone and Thomson Reuters, provides a benchmark for a potential Bloomberg LP deal. The Refinitiv purchase price of $27bn in aggregate is a multiple of revenue and ebitda of 5.5 times and 13.5 times respectively. Bloomberg LP’s annual revenue is estimated at $11bn, implying a purchase price of potentially $60bn.
Such an enormous price tag essentially precludes any strategic buyer. However, Bloomberg LP would be a perfect fit for a consortium of sovereign wealth funds, massive financial sponsors, and even the likes of traditional asset managers such as BlackRock. They all want to put billions to work for several years and are willing to accept returns below the 20 to 25 per cent of traditional private equity buyouts.
Assuming that Bloomberg LP generated ebitda of roughly $4bn, it could attempt to raise $30bn of debt. The largest LBO in history, that of Texas power company TXU, raised $30bn of new debt in 2007 in shallower capital markets. The remaining $30bn of equity would be challenging. But the likes of wealth funds in the Middle East and Asia along with US and Canadian pension funds would be interested in a subscription business that has prospered in the decade-long bull market.
A sale process introduces its own pitfalls. Some buyers would be looking to curry favour with a future Bloomberg administration. If Mr Bloomberg wins the election, selling his business could generate as many conflicts of interest as keeping it.
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