S&P Global and IHS Markit announced the biggest corporate merger of 2020 with a definitive agreement that values IHS Markit at $44bn.
The deal brings together these two complementary data and analytics businesses to create a technology heavyweight in the increasingly competitive financial information market. The deal, which includes $4.8bn of net debt, will enhance the combined company’s customer value proposition. And enable the firm to benefit from increased scale and mix across core markets with attractive scope for growth.
IHS Markit was valued at $36.88bn at the close of the stock market on Friday 27th 2020 with a share price increase of around 22% during the year so far. As part of the deal, each IHS Markit share will exchange at a ratio of 0.2838 shares of S&P Global Stock.
Once the sale is complete, S&P Global shareholders will own around 67.75% of the combined company with the remainder held by IHS Markit shareholders. Around $480m in annual run-rate cost synergies and around $350m in revenue synergies are expected to be created by the merger. Led by Douglas Peterson, S&P Global’s chief executive, the combined company will target a capital return of at least 8% of free cash flow.
This is the latest in a line of acquisitions for New York-based S&P Global, the parent company of S&P Global Market Intelligence. The firm has taken to the M&A markets over the past few years to increase its size and accelerate its provision of data and analytics to more customers.
However, the IHS Markit merger isn’t a done deal just yet. Antitrust regulators have shown increasing interest in the financial information sector. As a result, the deal will need to pass antitrust and regulatory scrutiny and meet the customary closing conditions in both the US and UK before it can be confirmed. Should everything go smoothly, the merger is expected to be approved in the second half of 2021 making this deal one to watch.
Matt Stamp, Software & Data Practice lead at Acuity Advisors commented,
“The rationale for the deal is driven by both classic consolidation (cross-selling, access to data & product) and a combined S&P and IHS Markit’s ability to invest in further technology. Applying AI and ML is fundamental to driving real value (speed to market, insight and automation) from financial information, giving bankers and traders the edge – this deal should enable S&P to push ahead of the competition and mitigate the continuing risk of newer entrants stealing market share.”
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