S&P Global to buy IHS Markit for US$44B

Data giant S&P Global Inc. has agreed to buy IHS Markit Ltd. in an all-stock deal worth US$44 billion that will be the biggest corporate acquisition of 2020 and create a heavyweight in the increasingly competitive market in financial information.

The mega deal, which IHS Markit CEO Lance Uggla told employees in a memo had been in the works for the last few months, highlights the growing importance of big data in financial markets governed by information-hungry trading algorithms.

It is expected to close in the second half of 2021 if it can pass reviews by antitrust regulators who have been showing increasing interest in the sector.

“The next steps will be to receive regulatory approvals both in the U.S. and the EU, which we expect to take between six to nine months, and receive approval by our respective shareholders,” Uggla said in the internal memo seen by Reuters.

S&P Global is best known for providing debt ratings to countries and companies, as well as data on capital and commodity markets worldwide. It became a standalone business in 2011 when its then parent McGraw-Hill separated S&P from its education business.

IHS Markit was formed in 2016 when IHS, whose businesses include data on automotive and technology industries, bought Markit Ltd. for around US$6 billion.

Markit, founded by former credit trader Uggla, provides a range of pricing and reference data for financial assets and derivatives.

IHS has a market value of around US$36.88 billion based on the stock's last close on Friday, a Reuters calculation showed, with its share price up around 22 per cent so far this year.

As part of the deal, which includes US$4.8 billion of debt, each share of IHS Markit will be exchanged for a ratio of 0.2838 shares of S&P Global stock, the two companies said.

S&P Global shareholders will own roughly 67.75 per cent of the combined company and the rest will be held by IHS shareholders. Douglas Peterson, CEO of S&P Global, will lead the combined firm, while Uggla will be a special adviser for a year after the deal closes.

Merger and acquisition activity touched a record high in the September quarter, with more than US$1 trillion worth of transactions, mostly focused on coronavirus-resilient sectors such as technology and health care, according to Refinitiv data.

The London Stock Exchange is in the final stage of trying to win clearance for its planned US$27-billion

THE NEXT STEPS WILL BE TO RECEIVE REGULATORY APPROVALS.

acquisition of data provider Refinitiv, which has been through a long review process by the European Union's competition commissioner.

Refinitiv was carved out of Thomson Reuters by private equity giant Blackstone in 2018, when it bought a 55-percent stake in the business in its biggest bet since the 2008 financial crisis. Thomson Reuters, parent of Reuters News, retains a 45-per-cent holding in the business.

Goldman Sachs acted as lead adviser to S&P, while Morgan Stanley was leading the negotiations for IHS. Citi and Credit Suisse also worked with S&P, while Barclays, Jefferies and JPMorgan helped IHS.

IHS shares gained rose nearly 7.5 per cent to US$99.46 in trading on Monday, while S&P Global was up about 3 per cent to US$351.78.