Verisk unloads regulatory and compliance management unit 3E in $950m deal

Data analytics provider  Verisk will sell unit 3E, its provider of chemical, regulatory and compliance information services, to the $35 billion investment firm New Mountain Capital for $630 million plus earnout options that could put the total eventual price tag at up to $950 million.

Verisk’s 3E business, part of its energy and specialised markets segment, delivers compliance solutions enabling its 5000 worldwide clients to manage global regulatory compliance, product stewardship risk and environmental health and safety (EHS) initiatives.

The purchase price consists of $630 million of cash consideration paid at closing, adjusted for balance sheet levels at closing, up to $50 million of earnout payments based on financial performance in 2023 and 2024, and up to $270 million of additional deferred payments based on New Mountain’s future return on its investment, for a potential aggregate cash consideration of up to $950 million.

Verisk intends to return the after-tax proceeds to shareholders through share repurchases, the firm said in its statement.

Verisk acquired 3E in 2010 for $107 million, and subsequently integrated its 2019 acquisition of Content as a Service (CaaS) into the 3E business.

“The sale of 3E marks an important step in Verisk’s ongoing comprehensive portfolio review to best position Verisk for continued solid growth,” said Scott Stephenson, chairman, president and CEO of Verisk. “These efforts are consistent with our focus on identifying the most value creating opportunities available to the company and our shareholders, and ensuring we generate strong returns on our invested capital."

Lee Shavel, CFO and group president, Verisk, said: “New Mountain Capital’s strategy of backing best-in-class companies is a strong endorsement of the essential role 3E plays in the success of customers in nearly every industry around the globe. We have great confidence that 3E will be well positioned to continue delivering critical services and value to its customers under New Mountain Capital.”

Pete Masucci, managing director of New Mountain Capital, said: “3E has a long history of innovation that has resulted in the development of differentiated and mission-critical software, data and services for its clients. We believe 3E is positioned to benefit from favourable macro trends as companies keep up with continuously evolving global regulations, provide a safer working environment for their employees and focus on meeting their sustainability goals.”

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