As announced in the press release, the purchase price is $5.3 billion, with $4.0 billion of that being in cash and the remaining $1.3 billion in equity. Clarivate will also refinance ProQuest debt. The transaction is expected to close in the third quarter of 2021, pending "customary closing conditions, including regulatory approvals".
As background, it was revealed that the content portion of ProQuest accounted for 62% of its revenue and software at 34%. Furthermore, 40% of revenue comes from outside North America and 81% of customers are in the higher education segment. ProQuest's Chairman Andy Snyder will become Vice Chairman on the Clarivate board, and Michael Angelakis, Chairman and CEO of Atairos, will also join the Clarivate board.
Clarivate Executive Chairman and CEO Jerre Stead sees the combined companies as being able to open new sales opportunities and even talked about upselling products. He cited the importance of content aggregation and a growing market in libraries for enterprise software.
Company histories
The current publicly listed Clarivate resulted from a merger of Clarivate Analytics with Churchill Capital Corporation. Churchill was formed specifically as a vehicle for acquiring companies, with Stead at its helm and its headquarters in London. Clarivate Analytics, which had a headquarters in Philadelphia, was created when Thomson Reuters spun off its Intellectual Property and Science unit in 2016. Thomson Reuters bought, in 1972, the Institute for Scientific Information (ISI), the company founded by Eugene Garfield in 1956 to commercialize his ideas about citation analysis as a metric of impact.
With a focus on science, technology, and intellectual property, Clarivate owns Web of Science, Cortellis, Derwent, CompuMark, MarkMonitor, and Techstreet. Both before and after it became a public company, it acquired Publons, Kopernio (renamed to EndNote Click), TrademarkVision, SequenceBase, Darts-ip, Decision Resources Group, CustomersFirst Now, and CPA Global. Its Journal Citation Reports is closely watched in academia as an indication of the impact value of research, as evidenced by the attention being paid to its May 2021 rollout of Journal Citation Indicator, which field normalizes the measurement of impact.
What Clarivate has not acquired is companies in the library technology space. This is what ProQuest brings to the table. Its initial excursion was the acquisition of Serials Solution in 2004 and the development of ProQuest Summon. It has since acquired Ex Libris in 2015 and Innovative Interfaces in 2019.
On the content side, ProQuest can trace its origins back to 1938, when Eugene B. Power founded University Microfilm International (UMI). UMI started by microfilming doctoral dissertations, along with a number of other microfilm and preservation projects. In 2006 Cambridge Scientific Abstracts (CSA), a company bought by Bob Snyder in 1971, formed Cambridge Information Group (CIG) and acquired ProQuest. CIG chose the ProQuest name rather than the Cambridge one for the combined company. It then bought Dialog in 2008 from Thomson Reuters.
ProQuest has continued UMI's preservation initiative, not only digitizing dissertations and theses, but also unique primary resource collections it added to ProQuest History Vault. ProQuest has a major presence in the ebook market, with its acquisitions of Ebrary and Ebook Library, which it combined as a single ebook platform. Moving into video, ProQuest acquired Alexander Street Press in 2016.
Products acquired and developed
Clarivate's strengths lie in its content related to science, technology and intellectual property. ProQuest's total content offerings are much broader, although many are licensed rather than owned. Still, its information relevant to the humanities and social sciences, its historical newspapers, multi-disciplinary ebooks, dissertations, data sources, and video expand the topic areas of Clarivate. Plus, ProQuest's development of products such as its TDM Studio for text and data mining mesh well with Clarivate content.
The funding and research information from ExLibris has significant synergy with Web of Science. RefWorks and EndNote have overlapping functionalities. When Dialog Solutions repositioned itself to focus on the pharmaceutical industry, intellectual property, and competitive intelligence, it competed directly with Clarivate. Expect to see consolidation in this area.
Librarian reactions to the acquisition range from the very negative (K. Matthew Dames, Boston University Librarian, tweeted that it was an "existential threat to the academy") to the merely frustrated (several librarians decrying their potential future dealing with multiple reps, confusing negotiations, and billing problems). Dominic Broadhurst, University of Salford, thinks that consolidation has been a pattern in the industry for years. It's simply easier to acquire a company than to develop your own systems, tools, platforms, and analytics. Other information professionals raised the issue of monopoly, but the market is probably not large enough to grab the attention of government agencies, either in the U.K. or the U.S.
Given the state of academic library budgets, it's unclear how well Stead's plans for cross-selling and up-selling will play out. Libraries are being forced to cut back, to cancel subscriptions, and to operate with severely reduced monetary resources. This does not bode well for content companies, particularly with the increased availability and acceptance of open access publications and the advent of read and publish agreements. Library budgets are not elastic; they won't stretch very far in today's environment.
With any acquisition comes questions that simply can't be answered in the short term. One is about the agreement ProQuest has with Dow Jones Factiva for marketing to higher education institutions. Will it continue or not? Another concerns branding. Clarivate eliminated the ISI brand, only to bring it back. Perhaps we'll see something similar with ProQuest branding. Pricing is always a concern to libraries and information professionals. If Clarivate moves away from the transactional pricing now used by Dialog Solutions, it will be a major blow to independent researchers and some in the corporate market.
When speaking to an investor audience, Stead emphasized both companies' "enterprise software" products, a phrase that probably resonates more with financial types than "library discovery systems" or "library workflow technology". It might also, however, reflect where the combined companies see possibilities for growth. Roger C. Schonfeld, on The Scholarly Kitchen blog, speculates that ProQuest "will eventually join Clarivate's Science business", which would put at least some content, certainly Dialog Solutions, reporting to Muktar Ahmed, president of science at Clarivate. Both units are currently based in London. That works for content but not so much for library technology. This is more likely to remain a separate business unit.
Consolidation among companies providing products and services to the library community is nothing new. Mergers and acquisitions are a fact of life and librarians have coped with changes in suppliers before. The acquisition of ProQuest by Clarivate demonstrates the increasing influence of corporate perspectives, from the exigencies of financial markets to the money-first mentality of hedge funds. This particular behemoth will take time to understand and could lead to a re-evaluation of the role of publishers, researchers and technology within the broader library context.
Addendum added 10 August 2021:
In relation to Clarivate's previously announced acquisition (the "Acquisition") of ProQuest ("ProQuest"), on July 28, 2021, Clarivate received a second request for documents and other information from the Federal Trade Commission (the "FTC"), which is reviewing the Acquisition pursuant to authority under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. In view of the FTC's second request, on July 28, 2021, Clarivate and the equity holders of ProQuest (collectively, the "Seller Group") entered into an amendment (the "Amendment") to their Transaction Agreement dated May 15, 2021, extending the outside date for completion of the Acquisition from November 8, 2021 to December 31, 2021, subject to further extension. Although the Company hopes to be in a position to complete the proposed Acquisition in the second half of 2021, the Company and the Seller Group each have the option to extend the new outside date to April 29, 2022. (https://ir.clarivate.com/news-events/press-releases/news-details/2021/Clarivate-Announces-Private-Exchange-Offers-for-Two-Series-of-Notes-Open-to-Certain-Investors/default.aspx)