The Department of Justice has probed whether a potential merger of Cision and Meltwater, the two largest PR software companies, would hurt competition

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Tom Gores

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PR measurement giants Cision and Meltwater are planning to merge, and the Justice Department’s antitrust division has probed the potential tie-up of the two biggest PR software companies, asking how the deal might affect competition and pricing in PR software, multiple sources said.

Three people said the Justice Department contacted them in early summer, asking about the PR software industry, how a potential merger of Cision and Meltwater would affect their competitors, and if they believed it would raise prices for their customers.

Cision declined to comment. Meltwater and the Justice Department didn’t respond to requests for comment by press time.

Cision and Meltwater have rapidly expanded their market share in recent years

Cision and Meltwater are software-as-a-service companies that PR agencies like Edelman and giant companies like Google use to push out their messaging and shape public opinion.

Customers use them to distribute press releases, create email lists of journalists and influencers, monitor media coverage and social media activity for their clients, and measure the impact of that coverage, among other things.

Cision formed in 2014 through a merger with Vocus. Over the past six years, Cision has spent hundreds of millions of dollars to acquire a dozen competitors with private equity backing, the most expensive being Trendkite, which it bought for $225 million. Beyond its tracking and measurement software, Cision’s products include press distribution services PRWeb and PR Newswire.

Cision briefly went public through a reverse merger in 2017. But two years later, private equity firm Platinum Equity acquired the company for $2.7 billion and took it private again, which was expected to allow it to lower prices, invest in technology, and acquire more companies. Cision reported $730.4 million in annual revenue in 2018.

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Meltwater raised $60 million in debt funding with Silicon Valley Bank and Vector Capital in 2017, and an additional $175 million from Vista Credit Partners two years later. 

Since its 2001 founding, Meltwater has acquired 13 companies, including social analytics company Sysomos, according to Crunchbase.

Meltwater has always been privately held and does not publish its finances, but Forbes and analytics platform Craft.co pegged the company’s revenue around $300 million in 2016, with annual client fees ranging from $5,000 to $25,000.

Some expressed concerns that a proposed merger would hamper competition

Some sources expressed concern that a merger of the two companies would staunch competition and effectively create a monopoly.

“What I see as harmful is they keep high-level prices and enforce longer term contracts and make them harder to get out of,” said an executive at a Cision competitor who was contacted by the Justice Department.

Cision charges some clients as much as $20,000 to use its services, this person said. But in the past, clients could play Cision and Meltwater off each other to get lower rates.

Over the years, Cision has faced pressure to revamp its customer services and provide better technology as new companies enter the market. One PR executive told Business Insider they were thinking about replacing Cision but that a merger with Meltwater, …read more

Source:: Business Insider

      

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