(Reuters) - Intercontinental Exchange Inc (N:ICE) said on Monday it would buy financial data firm Interactive Data Corp (IDC) from investment firms Silver Lake and Warburg Pincus LLC in a deal valued at about $5.2 billion (3 billion pounds).
ICE said the deal, which includes $3.65 billion in cash and $1.55 billion in ICE stock, will help build on ICE's market data business by adding technology platforms and increasing new data and valuation services.
ICE, valued at about $27.5 billion, said the deal to buy IDC, which provides financial data to banks, money managers and hedge funds, was approved by the boards of both companies.
The exchange operator said it expected cost synergies of $150 million, which will be largely completed within three years. The deal is expected to close at the end of this year.
ICE's shares were down 2 percent at $243.78 midday on Monday, reversing gains after touching a record high of $254.50 in early trading.
CLSA analyst Robert Rutschow flagged IDC's comparatively low margins as a concern.
IDC's EBITDA margin is 35-40 percent, which isn't as high as other data businesses and compares with ICE's existing data business' margin of above 75 percent, Rutschow wrote in a note.
The $150 million cost savings would push margins up to 55 percent, but that would still be below the margins at ICE's other market data unit, Rutschow said.
ICE's data business currently spans nine asset classes across the 11 exchanges and seven clearing houses it operates, including the NYSE Group and ICE Futures exchanges.
Bedford, Massachusetts-based IDC competes with companies including Thomson Reuters Corp (TO:TRI) and Bloomberg LP in providing pricing and data services to financial institutions.