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TMX Acquires VettaFi

TMX Group (Toronto Stock Exchange) announced that they were acquiring VettaFi (ETF Trends, ETF Database, Advisor Perspectives, and various index providers). The press release states that the transaction value is 15.4x 2024 estimated adjusted EBITDA. Including the 22% that TMX bought earlier this year, that brings the merger consideration to about $1 billion.

This seems to us to be a continuation of the theme of public stock exchanges diversifying away from their core business of equity transactions and associated data, an activity that is being commoditized, to ancillary value-added products. The London Stock Exchange's acquisition of Refinitiv might be seen as another example.

We also note that TMX used a "step-in" strategy. They first acquired 22% of the company last March and then got to know them better via a working partnership. Perhaps that is why they are able to close the transaction so quickly (next month). This can be an effective way for a strategic to make acquisitions that work. On the analyst call, management emphisized how beneficial the working partnership was in assessing the functional and cultural synergies.


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