Mergers & Acquisitions: Moody's to Buy Credit Risk Analyzer KMV for $210 Million

Moody's Corp., parent company of credit rating agency Moody's Investors Service, announced that it has reached an agreement to acquire KMV, a provider of market-based, quantitative, credit-risk management tools, in a $210 million transaction.

The transaction would be funded by cash and existing bank lines, and Moody's expects the deal to close early in the second quarter.

"This is a powerful combination that creates exciting opportunities for growth," John Rutherford Jr., president and chief executive officer for Moody's Corp., said in a prepared statement. "Moody's global reach and scale will help accelerate the growth of KMV's business, while KMV's market leadership will provide Moody's access to a wide array of new customers and innovative technological tools."

Moody's reported that the acquisition would allow it to expand its customer base and product offerings for its current credit risk management services business, Moody's Risk Management Services. KMV, a San Francisco-based firm, would obtain access to Moody's client base and product marketing capabilities, and would add to the capital markets credit rating business of Moody's Investors Service.

For this year, Moody's said that KMV revenues are expected to be $60 million, with a 10% pre-tax cash-flow margin. Combined KMV and Moody's Risk Management Services revenues are projected to be $100 million for the full year 2002.