Independent investment research company Morningstar has concluded plans to acquire Sustainalytics, a global leader in environmental, social, and governance (ESG) ratings and research. The acquisition announced today, will give Morningstar ownership of the remaining 60% of Sustainalytics stake in addition to the 40% it acquired in 2017.
According to the deal, Morningstar will pay an upfront cash equivalent of €55 million EUR (~$60 million USD) and another cash payment in 2021 and 2022 which will be determined by a multiple of Sustainalytics’ 2020 and 2021 fiscal year revenues.
Sustainalytics has been a recognised analytics company for the past 25 years, providing ESG solutions to investors, banks, and companies all over the world. Its famous security-level ESG Risk Ratings are integrated into institutional investment and is behind the products the company has rolled out over the years.
Morningstar intends to continue investing in the company as well as integrating ESG into Morningstar’s research and solutions for both institutional and retail investors going forward. This is potentially a major addition for Morningstar as it will be absorbing all of Sustainalytics’ 650 employees.
Morningstar stock surges following deal
Following the announcement of the deal, Morningstar stock (NASDAQ: MORN) has gained 2.71% according to data from market information platform Finviz. The future may be brighter for the stock as two companies continue to offer improved analytics services by virtue of this deal.
The Chief Executive Officer of Sustainalytics, Michael Jantzi speaking on the partnership said it will enable the two companies to bring ESG products and services to the global investment community and companies in a greater measure as Morningstar strongly believes in the company’s mission.
“Sustainalytics welcomes the opportunity to join the Morningstar family. Our collaboration over the past several years has helped to extend the understanding and use of ESG insights and strategies to a multitude of investors, advisors, asset owners and managers across the globe,” he said.
Chief Executive Officer of Morningstar, Kunal Kapoor also speaking said Morningstar and Sustainalytics coming together will ensure better service delivery for investors in terms of analysis and data-based investment decision making. In his words, he said:
“By coming together, Morningstar and Sustainalytics will fast track our ability to put independent, sustainable investing analytics at every level – from a single security through to a portfolio view – in the hands of all investors.”
The company will announce its Q1 2020 financial results on April 29th, after the close of the market. As of December 31, 2019, it had $233 billion in assets under advisement and management.