US-based investment research provider Morningstar has agreed to buy Canadian credit ratings agency DBRS for $669m.
Ranked as the fourth largest credit ratings agency in the world, DBRS has seven locations globally.
For the fiscal year ended 30 November 2018, the agency’s revenue was $167m.
Morningstar believes that if it owned DBRS as at 31 December 2018, its credit ratings revenue would have accounted for nearly 17% of its overall revenue.
“The combination of DBRS with Morningstar Credit Ratings’ U.S. business will expand global asset class coverage and provide an enhanced platform for providing investors with leading fixed-income analysis and research,” Morningstar stated.
The deal, which is subject to regulatory nod, will be financed through cash and debt.
It is expected to be wrapped up in the third quarter of this year.
Morningstar expects the deal to add to its net income per share in the first fiscal year after closing.
DBRS’ workforce of over 500 will continue to work under its current management.
A leader of the merged entity will be announced later.
Morningstar CEO Kunal Kapoor said: “The chance to empower investors with the independent research and opinions they need across a multitude of securities first drove our decision to enter the credit ratings business.
“DBRS and Morningstar share research-centric cultures committed to rigour and independence.
“Together, we believe we can elevate the industry with the world’s first fintech ratings agency backed by state-of-the-art models, modern technology, and expert research teams that issuers and investors can count on to deliver transparent and independent ratings.”