Moody’s Corporation (NYSE:MCO) has agreed to acquire Fermat International, a leading provider of risk and performance management software to the global banking sector. The combination of Moody’s credit portfolio management and economic capital tools with Fermat’s expertise in risk management software positions Moody’s to deliver comprehensive analytical solutions for financial institutions worldwide.

Moody’s will purchase Fermat for 132.5 million ($189 million), subject to customary closing adjustments. An additional sum of up to 25 million ($36 million) in consideration may be paid based on achievement of certain financial targets by year-end 2008. The acquisition will be funded primarily from offshore cash on hand, and Fermat will operate as part of Moody’s Analytics.

The acquisition combines leading risk management platforms from Moody’s Analytics and Fermat. By leveraging a proprietary and robust data management platform, Fermat helps banks meet regulatory capital requirements and provides risk management and performance monitoring capabilities. With installations at more than 100 banks — primarily in Europe, the Middle East and Asia — Fermat significantly extends the functional and geographic scope of the Moody’s Analytics suite of banking software. Founded in 1996, Brussels-based Fermat International has approximately 275 employees located worldwide serving customers in 30 countries, with significant operational and development hubs in France and Singapore.

Moody’s anticipates that this acquisition will add incremental annual revenues of approximately $75 million to $85 million by 2010, with lower incremental 2009 revenues reflecting most of the impact from purchase accounting and deferrals associated with conversion to U.S. GAAP. Future revenue growth will be achieved through license sales and fees from software maintenance and related professional services.  Source: Moody’s Press Release

BIIA Newsletter September 2008 Issue