Ipreo to pay upwards of $142 mln in damages over IHS Markit merger

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  • Judge agreed Ipreo violated non-compete agreement with Symbiont
  • Agreement formed Ipreo, Symbiont’s syndicated loans-focused joint venture
  • Joint venture fell apart after competitor IHS Markit acquired Ipreo

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(Reuters) – A Delaware state judge has ruled that investment banking-focused technology company Ipreo LTS LLC must pay at least $142 million in damages after finding that its merger with a competitor violated a non-compete agreement.

Vice Chancellor J. Travis Laster in Wilmington said in a ruling on Friday that Ipreo’s $1.86 billion sale to IHS Markit Ltd breached a prior non-compete Ipreo had with financial services technology business Symbiont.io Inc.

Ipreo and Symbiont entered into the non-compete when they formed a joint venture in 2016.

Laster’s called for the dissolution of the joint venture, which he suggested should receive the damage award to pay off its creditors.

Symbiont is expected to receive around $70 million after the joint venture is dissolved.

Symbiont CEO Mark Smith said in a statement that the company was “delighted” with the ruling.

A representative for IHS Markit, which now owns Ipreo, said in a statement that the company is “reviewing the decision and considering all options, including an appeal to the Delaware Supreme Court.”

Paul, Weiss, Rifkind, Wharton & Garrison partner Andrew Gordon, who represented Symbiont, declined to comment on the ruling. The Davis Polk & Wardwell attorneys advising Ipreo and IHS Markit did not immediately respond to a request for comment.

New York-headquartered Symbiont uses blockchain technology to digitize activities essential to the financial services industry.

In 2016, Symbiont and Ipreo agreed to create a joint venture, known as Synaps Loans LLC, to serve the syndicated loan industry and to compete with IHS Markit’s ClearPar, which controlled roughly 99% of the market, according to the opinion.

Ipreo was acquired by IHS Markit in 2018.

In 2019, Symbiont sued Ipreo, saying the acquisition violated the joint venture’s non-compete clause.

Symbiont also said that once the acquisition was disclosed, potential financiers for the joint venture began to reconsider their support and the venture ultimately ground to a halt after its CEO resigned in November 2019, the ruling said.

Ipreo countered that Symbiont breached the contract first by failing to deliver a “minimum viable product,” according to Friday’s opinion.

In his ruling, Laster said that the question at the center of the dispute was whether IHS Markit was an affiliate of Ipreo after the acquisition because the non-compete agreement barred Ipreo and its affiliates from engaging in other businesses that served the same market as the joint venture.

The judge concluded that IHS Markit was an affiliate under the contract’s “plain language” and rejected Ipreo’s claim that the term only applied to entities that were affiliates at the time the contract became effective.

Friday’s decision calls for Ipreo to pay damages equal to the amount of profits that Markit’s ClearPar produced between the date the Ipreo acquisition closed and Nov. 30, 2020, because the non-compete contract remained effective for one year after the joint venture’s CEO resigned.

The case is Symbiont.io Inc. v. Ipreo Holdings LLC, Delaware Court of Chancery, No. 2019-0407.

For Symbiont: Andrew Gordon, Jaren Janghorbani and Daniel Mason of Paul, Weiss, Rifkind, Wharton & Garrison; and William Lafferty of Morris, Nichols, Arsht & Tunnell

For Ipreo and IHS Markit: Dana Seshens and Daniel Schwartz of Davis Polk & Wardwell; and Blake Rohrbacher of Richards, Layton & Finger

Read more:

Data firm IHS Markit to buy Ipreo in $1.86 billion deal

Sierra Jackson

Sierra Jackson reports on legal matters in major mergers and acquisitions, including deal work, litigation and regulatory changes. Reach her at sierra.jackson@thomsonreuters.com

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Sierra Jackson