Xinhua Finance Acquires Mergent in Global Bid

Hong Kong-based Xinhua Finance, formerly known as Xinhua Financial Network, last week continued its bid to become a major international information provider by announcing plans to acquire US financial information company Mergent.

The deal, which should be completed over the next 60 days for an undisclosed amount structured in stocks and cash, means that the two companies will be able to share content, while Xinhua can use Mergent's database technology for some of its existing services.

"The union of Xinhua Finance and Mergent will create a global provider of fixed income information about firms in China, the US and Europe," says Fredy Bush, Xinhua Finance's vice-chairman and CEO.

Jonathan Worrall, CEO of Mergent, says the deal will allow Mergent to compete successfully with large competitors.

Mergent, which is headquartered in New York and Charlotte, North Carolina, specializes in information on publicly traded companies and fixed income securities. Its products include Mergent Corporate Actions, an electronic data feed of corporate actions and dividend payments on over 30,000 securities, and Mergent Fixed Investment Securities Database, a collection of publicly offered US corporate bond data.

Xinhua officials say they will be able to use Mergent's database technology to improve accessibility to Xinhua Corporate Database, which they claim is the largest corporate database in China.

The merger also means that Xinhua will be able to incorporate Mergent data into its rating services, Xinhua Far East China Ratings, and add to the depth of information available, officials say.

Xinhua also hopes that the move will help bring "best practices" to China, a Xinhua spokesperson tells Inside Market Data. She says Mergent's approach to developing industry, dividend and bond reporting standards will provide researchers at Xinhua Finance with a template for developing materials that "conform with the global investor community."

The spokesperson says that although the two companies will co-ordinate their operations, Mergent will function as an independent division. Therefore, the day-to-day running of the companies will not be affected and there will be no job losses. Mergent's Asia-Pacific offices in Melbourne and Tokyo will continue to run independently.

Worrall confirms this and says the company could even add jobs as a result of the merger.

The announcement follows Xinhua's takeover of US news agency Market News International (IMD, Dec. 15, 2003), and the nature of this deal mirrors the MNI acquisition. At that time, the Xinhua spokesperson told Inside Market Data that the acquisition would not affect the daily operations of the two companies, and that MNI would function as an independent division.

The spokesperson says Xinhua continues to look for acquisitions, though she declines to reveal further details. In February, Xinhua Finance announced that it had hired New York business consultants Gleacher Partners to identify possible acquisition targets in the US and Europe (IMD, Feb. 23, 2003).

Xinhua also participated in the April 2003 launch of the World Business News Alliance, a joint venture with US-based CBS Marketwatch and European news agency AFX News that is aimed at providing cheaper financial news globally (IMD, May 5, 2003).

Going forward, Xinhua is planning a public listing. The spokesperson was unable to give a timescale for this, but it appears likely that Xinhua will list either on the Hong Kong Exchange, Tokyo Stock Exchange, New York Stock Exchange or the Nasdaq.