Moody's agrees to acquire RMS for about $2.0 billion

August 17, 2021

Moody's (NYSE:MCO) and RMS enter an agreement for Moody's to acquire RMS, a global provider of climate and natural disaster risk modeling and analytics, for ~$2.0 billion from Daily Mail and General Trust plc.

The acquisition will immediately increase Moody's insurance data and analytics business to nearly $500 million in revenue.

For the fiscal year ending September 30, 2021, RMS is expected to generate revenue of ~$320M and adj. operating income of ~$55M.

As part of Moody's Analytics platform, RMS is expected to generate up to $150M of incremental run-rate revenue by 2025. The acquisition is expected to be accretive to Moody's diluted GAAP EPS in 2025 and, excluding purchase price amortization, is expected to be accretive to adjusted diluted EPS in 2024.

Moody's will fund the transaction through a combination of cash and the issuance of new debt. The acquisition is expected to close in late 3Q21, subject to the necessary approvals.

As a result of the RMS acquisition, Moody's has updated its guidance for FY21. Moody's FY21 diluted EPS is now projected to be in the range of $10.90-11.20; The company's 2021 adj. diluted EPS outlook remains in the range of $11.55-11.85 vs. $11.89 consensus.

In addition, Share repurchases are now expected to be ~$750M vs. prior guidance of ~$1.5B.

Over the current book year the total revenue will be 5.96 billion USD (consensus estimates). This is hugely more than 2021's revenue of 5.37 billion USD.

Historical revenues and results Moody's plus estimates 2021

The analysts expect for 2021 a net profit of 2.22 billion USD. The majority of the analysts expects for this year a profit per share of 11.87 USD. Based on this the price/earnings-ratio is 32.39.

Analysts expect a dividend of 2.48 USD per share. Thus the dividend yield equals 0.65 percent. The average dividend yield of the financial companies equals an attractive2.28 percent.

Based on the current number of shares Moody's 's market capitalization equals 72.15 billion USD. 37

Historical stock prices Moody's

At 18.50 the stock trades 0.7 percent lower at 384.44 USD.

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