IHS Markit Acquisition: Key Details, Impact, and What Comes Next

S&P Global's acquisition of IHS Markit, valued at $44 billion, marks a significant consolidation in the financial information services industry. This merger combines complementary assets to create a leading data powerhouse, enhancing capabilities across various sectors. The strategic move aims to accelerate growth and deliver unparalleled value to stakeholders, positioning the combined entity as a formidable player in the market.

What Is IHS Markit?

Founded in 1959, IHS Markit provides critical information, analytics, and solutions for various industries, including automotive, energy, financial services, and maritime. Its core products include market intelligence, credit ratings, and commodity insights. A unique differentiator is its comprehensive intelligence, offering a wide range of data and analytics across multiple sectors. Additionally, IHS Markit stands out for its in-depth special reports on trending topics and its strong focus on sustainability through its ESG products and solutions.

Who Acquired IHS Markit?

S&P Global plays a pivotal role in the industry by providing essential intelligence through data, analytics, and insights. Key products include S&P Capital IQ Pro for market intelligence, Ratings360 for credit ratings, and Platts Connect for commodity insights. The company also offers S&P Dow Jones Indices and AutoCreditInsight for mobility solutions. S&P Global holds a significant market position, influencing various sectors with its comprehensive offerings and trusted insights, helping businesses and investors make informed decisions.

When Was IHS Markit Acquired?

S&P Global completed its acquisition of IHS Markit on February 28, 2022. This merger, valued at $44 billion, comes amid a wave of consolidation in the financial information services industry. The timing is significant as it aligns with the industry's broader trend towards creating comprehensive data solutions and investing in advanced technologies like artificial intelligence and machine learning. This strategic move positions the combined entity to better serve global customers and drive future growth.

Why Was IHS Markit Acquired?

Market Expansion: The acquisition of IHS Markit by S&P Global significantly broadens their market reach. By combining S&P Global's credit ratings, market intelligence, and benchmarks with IHS Markit's fixed income benchmarks, bond pricing, and sector-specific data, the merged entity can offer a more comprehensive suite of services. This merger enables the distribution of IHS Markit products to S&P Global's extensive customer base, enhancing their global footprint and customer engagement.

Technology Integration: The merger allows S&P Global to leverage IHS Markit's advanced technological capabilities. The combined company plans to invest over $1 billion annually in technological advancements, including artificial intelligence and machine learning. This integration will enhance their product offerings and create new revenue streams by developing innovative solutions from their combined datasets, particularly in areas like credit and risk management, ESG, and energy transition data.

Competitive Advantage: The merger strengthens S&P Global's competitive position by creating a more robust and diversified portfolio. The combined entity is expected to achieve significant cost synergies, estimated at $600 million annually, and revenue synergies of approximately $350 million. This enhanced financial profile and increased scale will provide a competitive edge, allowing the company to offer more comprehensive and innovative solutions, thereby exerting pressure on rivals like Bloomberg and Moody's.

Acquisition Terms

• Acquisition Price: $44 billion, including $4.8 billion of net debt.
• Payment Method: All-stock transaction. Each share of IHS Markit common stock will be exchanged for a fixed ratio of 0.2838 shares of S&P Global common stock.
• Key Conditions or Agreements:
  • The transaction has been unanimously approved by the Boards of Directors of both companies.
  • The deal is subject to regulatory approvals and other customary closing conditions, with an expected completion in the second half of 2021.
  • IHS Markit shareholders will own approximately 32.25% of the combined company, while S&P Global shareholders will own approximately 67.75%.
  • The merger is expected to generate significant annual free cash flow and cost savings, with projections of $5 billion in free cash flow by 2023 and $480 million in annual cost savings.
  • The combined company will invest over $1 billion in technological advancements, particularly in artificial intelligence and machine learning.
  • Douglas Peterson will serve as CEO of the combined company, and Lance Uggla will stay on as a special adviser for one year post-closing.
  • The combined company will be headquartered in New York.
  • The deal is subject to scrutiny by antitrust regulators, particularly in the European Union.

Impact on IHS Markit

The acquisition of IHS Markit by S&P Global has led to significant changes in operations and management. The combined entity now operates six divisions, each led by specific executives, and has expanded its board to include four new directors from IHS Markit. Douglas Peterson, CEO of S&P Global, continues to lead the merged company, while Lance Uggla, former CEO of IHS Markit, serves as a special advisor for one year. The headquarters remain in New York, with a substantial presence in key global markets, ensuring a seamless integration of operations and management structures.

The merger has also enhanced product offerings and services, combining S&P Global’s credit ratings, market intelligence, and benchmarks with IHS Markit’s fixed income benchmarks, bond pricing, and sector-specific data. This integration allows the distribution of IHS Markit products to S&P Global’s extensive customer base, creating new revenue streams and innovative solutions. Employee reactions have been generally positive, with the merger promising greater career opportunities and growth. Customers have responded favorably, anticipating enhanced value propositions and comprehensive data solutions.

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