The combined company will be headquartered in New York and led by S&P Global’s president and chief executive, Douglas Peterson. IHS Markit’s chairman and chief executive, Lance Uggla, will serve as a special adviser for one year after the deal closes in the second half of 2021. S&P Global Chairman Richard Thornburgh will retain that role in the new company.
Rajiv Bhatia, a Morningstar equity analyst who covers S&P Global, said in a note to investors Monday that the purchase price was reasonable given IHS Markit’s valuation and the companies’ complementary software technologies and subsidiary businesses.
“We view the deal as a bet on sector deep data as well as a strategic decision to further embed itself in customer workflows,” Bhatia wrote in the note. “Despite the size of the deal, we don’t see a ton of regulatory risk from an antitrust perspective.”
In a presentation to investors filed Monday with the U.S. Securities and Exchange Commission, the companies said the combined firm would go far in “powering the markets of the future,” a nod to a fast-growing sector that relies heavily on technology for predictive analysis and has contributed to Wall Street’s growing hunger for financial data.
The deal brings a number of technologies under one umbrella, such as software developer Kensho, which S&P Global acquired in 2018, and IHS Markit Data Lake, a massive industry data set for business insights, to serve a global customer base.
Peterson said the new company will be better able to serve those customers. “This merger increases scale while rounding out our combined capabilities,” he said in a news release. It “amplifies our ability to deliver customers the essential intelligence needed to make decisions with conviction.”
The boards of directors for both companies unanimously approved the deal, which includes $4.8 billion in debt, the release said. Uggla told staff in an internal memo that negotiations had been in the works for several months, Reuters reported. The deal requires the approval of antitrust regulators and both companies’ shareholders, S&P Global said in a release.
Each share of IHS Markit common stock will be exchanged for a fixed ratio of 0.2838 shares of S&P Global common stock. Once the sale is complete, S&P Global shareholders will own about 67.75 percent of the company, and IHS Markit shareholders will own 32.25 percent.
S&P Global declined to say Monday how the merger would affect its employees. S&P Global has a global workforce of 23,000 while IHS Markit employs 15,500, according to an SEC filing.
Uggla called the purchase a win for both companies.
“Our highly complementary products will deliver a broader set of offerings across multiple verticals for the benefit of our customers, employees and shareholders,” he said in the release. “Our cultures are well aligned, and the combined company will provide greater career opportunities for employees.”
S&P Global closed Monday at $351.78 a share, up nearly 3 percent, while IHS Markit surged 7.4 percent to $99.46. Both trade on the New York Stock Exchange.
The resurgence of Wall Street dealmaking — which plunged under the weight of the coronavirus recession earlier this year — is another sign of growing business confidence. According to Refinitiv data, merger and acquisition activity peaked this year in the third quarter despite earlier tumbles. Deals in the United States so far in 2020 total more than $1.5 trillion, particularly in technology and health-care sectors that have thrived during the pandemic.