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IHS Merges with London-Based Data Research Firm
IHS Inc. and rival data provider Markit Ltd. have agreed to merge into a new company called IHS Markit with combined sales of $3.3 billion for their most recent fiscal years.
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IHS Inc. and rival data provider Markit Ltd. have agreed to merge into a new company called IHS Markit with combined sales of $3.3 billion.
Valued at more than $13 billion, the all-stock deal is expected to close in the second quarter. IHS and Markit shareholders will own 57% and 43%, respectively, of the combined company.
The partners describe their businesses as complementary with non-overlapping customers and products. They hope to cross-sell their products to each other’s customers—such as targeting Markit’s enterprise data management services to IHS’ automotive, oil and gas customers—and have identified $100 million of such opportunities by 2019. They also expect to achieve $125 million in cost reductions through operational synergies.
London-based Markit was founded in 2003 by ex-TD Securities credit trader Lance Uggla. The company provides pricing and reference data, enterprise software systems, and valuation and trading services. Markit’s sales totaled $1.1 billion last year, focusing primarily on the financial services market. Lesser targets included the aerospace, automotive, chemical, energy and maritime industries.
IHS posted sales of $2.1 billion last year and has 9,000 employees worldwide—about twice as many as Markit. It has purchased more than 30 companies in the past five years, including the recent acquisition of Canada’s CarProof used-car data firm. It acquired R.L. Polk & Co. in 2013.
The transportation market is expected to account for 23% of the combined company’s business, down from 35% currently for IHS. By regions, the Americas will go from 67% of IHS business to an estimated 60% for the combined operations, while the Europe/Middle East/Africa market grows from 23% to 30%.
IHS Markit will be based in London and maintain offices at IHS’ headquarters in Englewood, Col. The move from the U.S. to London will lower IHS’ effective tax rate, but the 57% ownership level is three percentage points short of the 60% threshold that would subject the transaction to potential penalties under the U.S. Treasury’s so-called corporate tax inversion regulations.
IHS CEO Jerre Stead will be chairman and CEO of IHS Markit until he retires at the end of 2017. He will be replaced at that time by Uggla, who will serve as president in the interim.