New $13bn Data Heavyweight on the Ring: IHS and Markit to Merge

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On March 21, US-based market data provider IHS announced a merger of equals with London-headquartered financial information provider Markit in a $13bn stock deal. The new company, to be called IHS Markit, will challenge the industry dominance of Bloomberg and Thomson Reuters. After completion of the transaction, former shareholders of IHS will own about 57% of the new company. Investors in Markit will end up with about 43% of the firm. The deal will also give the new company the opportunity to benefit from UK’s lower corporate tax rate.

About IHS

IHS is a Colorado-headquartered financial data provider operating in over 33 countries with c. $2.2bn in yearly revenues as of the end of 2015. Its expertise lies on providing and analyzing energy (Resources Division) and transportation (Transportation Division) data for corporate customers. An additional division of the company is specialized in providing information for technical professionals across the product design, technology, and economic risk industries (CMS Division).   In the past years the company has reorganized itself, now by product segment, and is in a process of divesting non-core assets—such as the Operational Excellence and Risk Management (OE&RM) and the GlobalSpec product offerings—in order to determine and pursue the strategic fit, profitability, and growth potential of all its assets under the new product segment organization. Moreover, IHS raised its EBITDA margin and produced a substantial free cash flow in 2015, which was used in strategic acquisitions. The company was involved in two acquisitions in 2015, first acquiring CARPROOF, a Canada-based vehicle data provider, and then by acquiring Oil Price Information Service (OPIS), a US-based petroleum pricing data provider.

About Markit

Markit is a London-based financial information provider operating in 13 countries with c. $1.1bn in yearly revenues at the end of 2015. It was formed in 2001 by a group of former credit derivatives traders from TD Securities, and went public on NASDAQ in 2014. Markit aggregates information from major bond dealers and uses it for research, valuation, trading, and reporting. Its main clients are investment and trading clients. The company operates through three divisions: an Information division, which provides pricing, reference data, indices, valuation and trading services; a Processing division, which offers trade processing solutions for OTC derivatives, foreign exchange, and syndicated loans; and a Solutions division, which provides enterprise software platforms, managed services, and custom Web solutions. In 2015 Markit acquired the Halifax House Price Index, Information Mosaic, DealHub and CoreOne Technologies in order to keep the company’s position as leading service provider, although none of these acquisitions were large transactions.

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