Verisk, a leading global data analytics provider, announced that it has entered into a definitive agreement to sell its 3E business to New Mountain Capital, a growth-oriented investment firm with over $35 billion in assets under management, for a potential aggregate cash consideration of up to $950 million.

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Verisk’s 3E business, part of its energy and specialized markets segment, delivers intelligent compliance solutions that enable companies to manage global regulatory compliance, product stewardship risk and drive continuous improvement to support their environmental health and safety (EHS) initiatives. 3E offers industry-leading software and information services to 5,000 customers worldwide, including industry leaders across chemical manufacturing, retail and pharmaceuticals. 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. Today’s announcement represents a great outcome for Verisk, our shareholders and the talented 3E team.”

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 favorable 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.”

Gandharv Bedi, director at New Mountain Capital, added: “3E strongly impressed us as a uniquely attractive platform in both the EHS and information services sectors that New Mountain knows extremely well. We are excited to partner with the team to support 3E in its next phase of growth and look forward to investing towards continued product innovation, substantial market expansion, and strategic acquisitions to further expand 3E’s value proposition to its customers and partners.”

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The total purchase price is subject to typical adjustments for, among other things, the working capital and the debt of the business at closing. The purchase price consists of $630 million of cash consideration paid 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 transaction is subject to customary closing conditions, including regulatory approvals.

BofA Securities is acting as financial advisor and Davis Polk & Wardwell as legal advisor to Verisk in connection with the transaction. Simpson Thacher & Bartlett is acting as legal advisor to New Mountain.