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McGraw Hill Financial to Buy SNL Financial for $2.2 Billion

McGraw Hill said SNL will complement S&P Capital IQ’s platform in banking and insurance.

Big data is fetching a bigger price tag.

McGraw Hill Financial Inc. MHFI -0.52 % agreed to buy SNL Financial LC for $2.2 billion in cash in a deal announced Monday, nearly five times what the financial data provider was worth four years ago when private-equity firm New Mountain Capital LLC purchased a 60% stake.

New York-based McGraw Hill outmaneuvered a handful of media and financial-data companies in its pursuit of the Charlottesville, Va.-based SNL, according to people familiar with the matter. The pursuers included Hearst Corp., which has a majority ownership stake in bond grader Fitch Ratings, as well as financial data provider FactSet Research Systems Inc., according to a person familiar with the matter. A Hearst spokesman declined to comment. A FactSet spokeswoman didn’t immediately respond to a request for comment.

Investors weren’t pleased with the multiple McGraw Hill agreed to pay, driving shares down 5.67%, or $5.99, to $99.59.

One analyst, Timothy McHugh with William Blair & Co., said the price for SNL “is probably a little high,” in a Monday note to investors. But another, William Bird of FBR Capital Markets & Co., said “the stock reaction seems exaggerated.” Mr. Bird estimated the multiple paid by McGraw Hill was more than 43 times SNL’s 2015 earnings before interest, taxes, depreciation and amortization of about $51 million.

McGraw Hill Chief Financial Officer Jack Callahan acknowledged SNL “was certainly not cheap” but said his company’s sales staff outside of the U.S. could help broaden SNL’s reach...