Moody's Boosts Ownership Stake In India's ICRA To Over 50%

(RTTNews) - Credit ratings agency Moody's Corp. (MCO) announced Thursday that it has secured majority equity ownership stake in Indian peer ICRA Ltd., increasing its stake to over 50.0 percent from 28.5 percent. The deal is expected to close on or by June 30, 2014.

The total value of the deal is about $86 million or 5.17 billion rupees, based on current exchange rates. Moody's said it will fund the offer from international cash on hand.

"The successful conclusion of our offer for a majority stake in ICRA will allow us to extend our strong ties as we work together to serve the growing domestic debt market in India and across the region," said Raymond McDaniel, President and CEO of Moody's.

ICRA, established in 1991, is the second largest Indian rating company in terms of customer base, and third-largest in terms of revenues.

The deal will enable Moody's to compete better with larger rival Standard & Poor's to gain market share in India. S&P's owner McGraw Hill Financial, Inc. (MHFI) had raised its stake in Indian peer Crisil Ltd. to 68 percent from 53 percent in August 2013.

New York-based Moody's announced a conditional open offer on February 21 to acquire up to an additional 26.5 percent or 2.65 million equity shares of New Delhi-based ICRA at a price of 2,000 Indian rupees per share, which represented a 25.9 percent premium to ICRA's closing price on the National Stock Exchange on February 21, the last trading day before the offer announcement.

Moody's then raised offer price on May 28 to 2,400 rupees per equity share, representing a premium of 51.1 percent to the closing stock price of ICRA on February 21. The offer price also represented a 20 percent increase over the previous offer price of 2,000 rupees per equity share.

Moody's, which already holds 28.5 percent of ICRA, purchased its initial minority ownership stake in ICRA in 1998. It then acquired an additional 9 percent equity stake in 2001, and increased its equity stake to the current 28.5 percent in 2004. Moody's contributes 15 percent of ICRA's revenues.

MCO closed Thursday's regular trading session at $85.70, down $0.79 or 0.91% on a volume of 0.61 million shares.