Two big players in the investment research space are joining forces.

Morningstar Inc., a U.S.-based independent research firm is fully acquiring Sustainalytics, a Dutch-domiciled firm specializing in environmental, social, and governance ratings and research.

Morningstar already took on a 40 per cent ownership stake in Sustainalytics in 2017 and will be buying the remaining 60 per cent to establish full ownership.

“Modern investors in public and private markets are demanding ESG data, research, ratings, and solutions in order to make informed, meaningful investing decisions,” said Kunal Kapoor, chief executive officer at Morningstar, in a press release. “From climate change to supply-chain practices, the nature of the investment process is evolving and shining a spotlight on demand for stakeholder capitalism. Whether assessing the durability of a company’s economic moat or the stability of its credit rating, this is the future of long-term investing.”

The transaction is set in include an upfront cash payment of about EUR 55 million with additional future cash payments based on a multiple of Sustainalytics’ 2020 and 2021 fiscal year revenues. The transaction details put Sustainalytics’ total enterprise value at about EUR 170 million. The deal is expected to close in the third quarter of 2020.

“Sustainalytics welcomes the opportunity to join the Morningstar family. Our collaboration over the past several years has helped to extend the understanding and use of ESG insights and strategies to a multitude of investors, advisors, asset owners and managers across the globe,” said Michael Jantzi, CEO of Sustainalytics. “This new ownership structure will amplify our ability to bring meaningful ESG insights, products, and services to the global investment community and to companies around the world. Importantly, I am thrilled that my colleagues and I are joining a firm with a belief in our mission and intent to help us further expand our reach.”