End of the Affair

In recent years, the market data industry has been hit by a wave of consolidation among data vendors-driven in part by consolidation among their clients-with Reuters, Thomson Financial and Interactive Data emerging as the most acquisitive vendors. As with personal relationships, though, mergers and acquisitions don't always have fairytale endings.

Anyone interested in low latency who attended the SIA show last June will remember the announcement of merger plans between Chicago-based ticker plant vendor HyperFeed Technologies and St. Louis, Mo-based high-performance hardware provider Exegy. In fact, it was a shotgun wedding of sorts-the two were already preparing for the birth of a new generation of ticker plants that would be hardware appliances rather than software systems.

After the announcement, the two began working more closely. They met the families, so to speak-their development teams began working together, sharing their expertise and customer details-moved in together and began sharing common resources. For example, in eager anticipation of the deal proceeding as planned, HyperFeed transferred its customer service and support hotlines to Exegy's headquarters.

But soon the relationship began to sour, and when HyperFeed received its "Dear John" letter exercising an escape clause from the merger agreement, the vendor realized it was unable to sustain an ongoing business without Exegy. Furthermore, HyperFeed's future funding was contingent on the completion of the deal. HyperFeed couldn't live without Exegy, and was forced to close its doors to business and file for bankruptcy protection.

Perhaps HyperFeed's management should have realized something was wrong when Exegy did not respond to HyperFeed's requests for data to meet the US Securities and Exchange Commission's requirements for the two companies to merge. When your partner doesn't talk to you, it's usually a sign that something is wrong.

Another bad sign was when Exegy then tried to revise its prenup, which, according to HyperFeed, was the straw that broke camel's back. HyperFeed headed straight to the circuit court of Cook County, Ill. and slapped its former suitor with a suit, which lists 13 separate areas in which HyperFeed had assisted Exegy or transferred functions to Exegy or had stopped providing functions of its own in anticipation of the merger going ahead.

So what happens now?

While we wait for a trial, Exegy has removed mention of ticker plants, finance and HyperFeed's products from its Web site. In the meantime, HyperFeed was forced to scramble to pull together an alternative service for its clients as the walls fell down around them. In the end, Reuters and BT Radianz have agreed to support HyperFeed's customer base, giving them a 90-day reprieve.

Was HyperFeed unfairly treated? Did it ignore basic principles by jumping into bed before formally tying the knot? Or did HyperFeed president and CEO Paul Pluschkell, the consummate deal-maker, finally run out of luck? Who knows? What we do know is that this painful breakup has removed one market data technology provider from the industry, and probably discouraged another with innovative solutions from entering it.

It also means that the former Telerate products licensed to HyperFeed by Reuters-the TRS data distribution platform and the Activ8 data display-are no more: Market forces have finally eliminated what regulators strove to protect.

RIP, HyperFeed.

Max Bowie is editor of Inside Market Data and can be reached at max.bowie@incisivemedia.com. For a free 6-issue trial of IMD, visit www.insidemarketdata.com.